Beijing’s help sought for insurance cover of six CPEC projects

Published November 10, 2021
In this file photo, Khalid Mansoor speaks to media at Energy Infrastructure Cooperation Forum in Beijing, China, on November 11, 2018. — Photo courtesy: GE Middle East, North Africa & Turkey
In this file photo, Khalid Mansoor speaks to media at Energy Infrastructure Cooperation Forum in Beijing, China, on November 11, 2018. — Photo courtesy: GE Middle East, North Africa & Turkey

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

Follow Dawn Business on Twitter, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

Not without reform
Updated 22 Apr, 2024

Not without reform

The problem with us is that our ruling elite is still trying to find a way around the tough reforms that will hit their privileges.
Raisi’s visit
22 Apr, 2024

Raisi’s visit

IRANIAN President Ebrahim Raisi, who begins his three-day trip to Pakistan today, will be visiting the country ...
Janus-faced
22 Apr, 2024

Janus-faced

THE US has done it again. While officially insisting it is committed to a peaceful resolution to the...
Elections in India
Updated 21 Apr, 2024

Elections in India

Independent accounts and spot reports are at variance with Modi-friendly TV anchors and they do not see an easy victory for the Indian premier.
IHC letter
21 Apr, 2024

IHC letter

THIS is a historic opportunity for the judiciary to define its institutional boundaries. It must not be squandered....
Olympic preparations
21 Apr, 2024

Olympic preparations

THIS past week marked the beginning of the 100-day countdown to the Paris Olympics, with the symbolic torch-lighting...