ISLAMABAD: Pakistan has sought Chinese government’s intervention to persuade China Export and Credit Insurance Corporation — Sinosure — to clear about $13 billion insurance cover of energy and infrastructure projects on priority basis.
Sinosure — the Chinese state insurer — has to underwrite all foreign investments and debts but has been holding back insurance cover of about $5bn to six major power projects of over 3,500MW under China-Pakistan Economic Corridor (CPEC).
It also has to underwrite $8-9bn insurance cover to Mainline-1 — a 1,733km railway line from Karachi to Peshawar.
Special Assistant to the Prime Minister on CPEC Khalid Mansoor told journalists on Tuesday that he had taken up the matter with Chinese ambassador in Islamabad and with his support written letters to the vice chairman of National Development and Reform Commission (NDRC) for his intervention to resolve on priority all issues relating to strategically important projects, including ML-1 and six energy projects including Gwadar, Karrot, Kohala and Azad Pattan, Thar Block-VI and Thal-Nova power projects besides Quaid-i-Azam Solar power project.
“We have written two separate letters to NDRC for resolution of issues hampering the financial close of six energy projects and the term sheet for ML-I project,” said Mir Mansoor. He said the nature of friendly relationship between Pakistan and China was such that their companies had never called government guarantees despite huge overdue receivables from Pakistan.
He said the Chinese lenders were ready to provide funds for above projects but Sinosure had to give insurance policy. Many of these projects have already advanced with equity investment and could not be delayed for debt part. He said the government was also looking providing extension in revised commercial operations dates for these projects in a holistic manner because Covid-19 had created force majeure type of situation.
He said Chinese companies in power sector had an overdue amount of Rs250bn and Sinosure was holding back underwriting policy to further loans. He said a letter was written to NDRC to urge Sinosure to underwrite six already committed energy projects.
Similarly, on ML-I project NDRC was asked to resolve the pending issues related to the term sheet of the financing. Pakistan has already submitted its own plan and now a term sheet from lender is awaited.
He said the cost of the ML-I was estimated at $9.2bn through a bankable feasibility study which was rationalised in the revised PC-I to $6.8bn which surprised China because Pakistani side had removed contingency and security cost from the project. The Chinese are of the opinion that the cost is underestimated. He said Pakistan had now proposed to go for bidding among Chinese leading companies. “They are not backtracking from their commitment of funding ML-I and soon you will hear good news about the project”, he said.
Published in Dawn, November 10th, 2021