The propaganda against the China-Pakistan Economic Corridor (CPEC) has not come to an end. A section of local as well as international media is publishing negative coverage regarding the CPEC and its different projects.
Recently, a New York Times article claimed that the flagship Chinese investment project has taken a military turn. Now, a section of media claimed in a report that Pakistan will have to repay $40 billion on the CPEC loans and that the actual investment is very low.
However, the Chinese Embassy in Islamabad has taken notice of the report, saying that the number of $40 billion is wrong and misleading.
The Chinese Embassy’s clarification stated:
The CPEC is a major and important economic cooperation project between China and Pakistan. All CPEC projects are based on a consensus of the two countries and fully comply with relevant laws and regulations. Currently, 22 early harvest projects under the CPEC have been completed or are under construction, with a total investment of $ 18.9 billion. These projects aim at resolving two major bottlenecks hindering economic development of Pakistan; the lack of transportation infrastructure and energy shortage.
The financing details of 22 projects are as follows:
The Chinese government has provided concessional loans of $5.874 billion for Pakistan Government’s major transport infrastructure projects, with a composite interest rate of around 2 percent in a repayment period of 20-25 years. The Pakistani government provides a sovereign guarantee for the above loans and will start the repayment from 2021.
The Chinese companies and their partners invested $12.8 billion in energy projects in Pakistan. Among them, Chinese companies provide $3 billion from their own equity. The remaining $9.8 billion was raised from commercial banks with an interest rate of about 5%. The repayment period is 12-18 years. All the CPEC energy projects are an investment in nature. The companies are responsible for their own profits and losses and repayment of loans. The Pakistani government does not repay these loans under CPEC. The business cooperation between the two sides is in full compliance with internationally accepted business practices.
The Chinese government has provided interest-free loans for Expressway East Bay in Gwadar.
China has also provided grants for some livelihood projects. The Pakistani government provided funding for the feasibility study of ML-1 upgradation.
Therefore, Pakistan will repay only $6.017 billion (Category I $ 5.874 billion and Category III $ 0.143 billion) and their interests to China. China and Pakistan are discussing how to use the Chinese grant to implement new projects such as new Gwadar international airport, Gwadar vocational training centre and friendship hospital, etc. Once the financial details are available, they will be shared.
During Prime Minister Imran Khan’s visit to China in November 2018, the two sides reaffirmed their commitment to CPEC and agreed to ensure the normal operation of the completed projects and the smooth completion of the ongoing projects. The two sides also agreed to consult with each other on the future path and direction of CPEC, considering Pakistan’s priority of economic and social development and the demands of Pakistani people.
The Chinese Embassy appreciated the Pakistani people for their support on CPEC and welcomed the supervision from all works of life. “We are willing to join hands with Pakistani friends to nourish CPEC and create a favorable environment for cooperation. We believe that CPEC, as an important project for China-Pakistan all-weather cooperation, will not only help Pakistan to ease energy load shedding, improve infrastructure connectivity, promote economic growth, but also benefit the people of Pakistan and make an important contribution to the building of China-Pakistan Community of Shared Future,” it said.