Panel urges early resolution of tax, procedural matters facing CPEC

Published October 21, 2021
A file photo of Gwadar Port. — Reuters/File
A file photo of Gwadar Port. — Reuters/File

ISLAMABAD: The Pak-China Relations Steering Committee (PCRSC) on Wednesday asked the federal and provincial authorities to expedite the resolution of outstanding taxation and procedural matters of Chinese investors on priority to attract further investments in special economic zones (SEZs).

Simultaneously, the National Electric Power Regulatory Authority (Nepra) also advised power sector authorities to complete legal requirements and documentation for speedy decision making instead of looking for shortcuts to address outstanding issues of Chinese power companies.

The third meeting of the PCRSC presided over by Minister for Planning and Development Asad Umar also noted that minor problems which should be settled at the provincial level, ministries, board of directors of relevant entities and cabinet committees were unnecessarily being brought up before it. It desired that only progress reports on already settled issues and pending problems be presented to it for timely interventions.

The PCRSC – constituted a few months ago – mostly comprised federal secretaries besides military and intelligence agencies.

Right of way issue for Matiari-Lahore transmission line settled

The committee discussed various issues related to the China-Pakistan Economic Corridor (CPEC) projects in power, infrastructure and industrial cooperation sectors. It further directed that issues like withholding tax and investment facilitations should be taken to the relevant forums for decision making at the earliest.

Informed sources said that during the course of discussions on power projects like Matiari-Lahore Transmission Line, Zonergy’s Solar project and a couple of others, a Nepra team – led by its chairman Tauseef H Farooqi – pointed out that being a quasi-judiciary forum, it required complete documentation and the government decisions to come out with judgments and the relevant agencies particularly Private Power & Infrastructure Board (PPIB) should focus on deliverables on their part to qualify early decisions.

The regulator also pointed out that in one of the projects a sizable amount had been claimed on account of a sewerage recycling plant at a distance from the project that was not part of the original project and required due diligence under the laws and rules. The hearing on the subject had taken place only last week and now documentation was awaited both from Nepra’s own technical team and others.

The committee was told that different tax rates were applicable in Punjab, Khyber Pakhtunkhwa and Azad Jammu & Kashmir (AJK) on various hydropower projects being developed by Chinese firms. It was also highlighted that hydropower projects had lower withholding tax rates when Chinese contracted projects but were increased later in finance bills that was causing unnecessary discomfort.

The planning minister told the participants that while federal government could not ask provincial and AJK governments to have same tax rates for various projects in their jurisdictions, the PCRSC could request them to decide such matters at the earliest to give clarity to investors. However, the committee asked the relevant agencies to move quickly on WHT issue at the level of relevant cabinet committees for an early decision instead of keeping it lingering.

The committee was informed that a number of issues discussed during the last meeting in August had been resolved while some others were under process for approval of the relevant fora. The Power Division informed the committee that proposals for extension of commercial operations dates of six power projects were under process and the matter will be discussed in the upcoming meeting of the board of the Central Power Purchasing Agency (CPPA).

The committee was informed that the Right of Way issue for the 660kV High Voltage Direct Current Matiari-Lahore Transmission Line near Karachi had been resolved and power was now being evacuated through the transmission line. The committee was also briefed on the 880MW Sukki Kinari Hydropower Project. The committee directed the KP government to resolve the operational issues faced by the project on priority.

Secretary Ministry of Communications briefed the committee on the ongoing projects in the infrastructure under CPEC and informed the committee that the re-alignment of Thakot-Raikkot is a critical component of the northern alignment. The secretary highlighted that the G2G technical committee has been formed for the project and the terms of reference of the committee had also been shared with the Chinese for views and comments. The committee directed that meeting be convened soon under Deputy Chairman Planning Commission to discuss the financing modalities of the project.

The committee also discussed the issues faced by the investors in different SEZs. The Punjab Board of Investment & Trade and KP EPZ Authority updated the committee on the individual issues of various investors. Sindh Investment Department informed that the developer for Dhabeji SEZ had been identified and final approval would be granted soon.

Published in Dawn, October 21st, 2021

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