ISLAMABAD, Nov 24: Pakistan and China on Friday signed $325 million agreement for construction of an additional 200km part of Karakoram Highway (KKH) from Rai Kot to Sazeen.

The agreement was signed between the Bank of China and the economic affairs division by Communications Minister Mohammad Shamim Siddiqui and China Road and Bridge Company Chairman Chen Yu Sheng.

Speaking on the occasion, Mr Sheng said there was a shortfall in the amount allocated for the project but it could be met by China. He said the study of Gilgit-Skardu section of the highway would be carried out soon.

The company, he said, would send 200 engineers and surveyors to Pakistan in February 2007 and the construction work would start by March.

"The construction of the KKH is a big challenge but we will complete it in the minimum possible time," he said.

The Chinese official said his company would be responsible for maintenance of the KKH for one year and in the next year it would impart training to Pakistani engineers.

The Chinese firm would construct a sports complex, children parks, dispensaries and restaurants along the highway, he said.

He thanked the Pakistani nation for according warm welcome to Chinese President Hu Jintao, saying both the nations had strong relations of friendship and the Karakoram Highway was the main artery of this friendship.

The minister for communications said China had already signed an agreement for construction of the KKH from Khunjrab to Rai Kot, which was a 335-km long stretch.

He asked Chinese company to also construct 74km highway from Gilgit to Skardu.

Mr Siddiqui assured the Chinese official that the Pakistani government would offer all possible help and support to his company during the construction of the KKH.

The minister said the distance between Kashghar and Gwadar was 2,600kms whereas the distance between Beijing to Kashghar was 8,500kms.

Therefore, the highway would boost economic activities between the two countries and Central Asian Republics.

He said a quadrilateral agreement had already been signed by Pakistan, China, Tajikistan and Kyrgyzstan for movements of goods.