China commits $ 45.6 b for economic corridor with Pakistan
Saturday, 22 November 2014 00:01
-
- {{hitsCtrl.values.hits}}
Reuters: The Chinese Government and banks will finance Chinese companies to build $ 45.6 b worth of energy and infrastructure projects in Pakistan over the next six years, according to new details of the deal seen by Reuters on Friday.
The Chinese companies will be able to operate the projects as profit-making entities, according to the deal signed by Prime Minister Nawaz Sharif during a visit to China earlier this month.
At the time, officials provided few details of the projects or the financing for the deal, dubbed the China-Pak Economic Corridor (CPEC).
The deal further cements ties between Pakistan and China at a time when Pakistan is nervous about waning US support as troops pull out of Afghanistan.
Pakistan and China, both nuclear-armed nations, consider each other close friends. Their ties are underpinned by common wariness of India and a desire to hedge against US influence in South Asia. Documents seen by Reuters show that China has promised to invest around $ 33.8 b in various energy projects and $ 11.8 b in infrastructure projects.
Two members of Pakistan’s planning commission, the focal ministry for the CPEC, and a senior official at the ministry of water and power shared the details of the projects.
The deal says the Chinese Government and banks, including the China Development Bank and the Industrial and Commercial Bank of China Ltd (ICBC), one of China’s ‘Big Four’ state-owned commercial banks, will loan funds to Chinese companies, who will invest in the projects as commercial ventures.
“Pakistan will not be taking on any more debt through these projects,” said Pakistan’s minister for water and power Khawaja Asif.
Major Chinese companies investing in Pakistan’s energy sector will include China’s Three Gorges Corp, which built the world’s biggest hydro power scheme, and China Power International Development Ltd.
Sharif signed more than 20 agreements during his trip to China earlier this month, including $ 622 m for projects related to the deepwater, strategically important Gwadar port, which China is developing. The port is close to the Strait of Hormuz, a key oil shipping lane. It could open up an energy and trade corridor from the Gulf across Pakistan to western China that could be used by the Chinese Navy - potentially upsetting rival India.Pakistan sees the latest round of Chinese investments as key to its efforts to solve power shortages that have crippled its economy.
Blackouts lasting more than half a day in some areas have sparked violent protests and undermined an economy already beset by high unemployment, widespread poverty, crime and sectarian and insurgent violence.
