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Pakistan asks China to restart CPEC projects stalled over investment, power dues and safety

A CPEC project in progress (Photo: @AmbNong)

The Imran Khan government has requested China to restart seven energy and infrastructure projects around $12 billion, which Beijing has stalled over poor security and non-payment of dues by Islamabad.

Special Assistant to Prime Minister on the China Pakistan Economic Corridor (CPEC) Affairs Khalid Mansoor told the Pakistani media on Tuesday: "I have written two separate letters to the Vice Chairman of National Development and Reforms Commission (NDRC) of China, urging him to remove barriers” hindering the completion of these projects", reports The Express Tribune.

Compensation for dead Chinese engineers

This is not the first time that Pakistan has requested China to restart the stalled projects. Earlier also it had asked Chinese companies to restart work on the Dasu hydropower project being built on the Indus river. However, Chinese companies demanded a hefty compensation for their killed engineers before restarting work on the project. The work remains stalled since July 13, when an attack killed nine Chinese nationals.

The Pakistan military has heightened security for Chinese workers yet China has refused to restart the project. Chinese nationals, however, live in fear in Pakistan says the BBC.

Lack of money for investment

Now Pakistan wants Chinese's support to restart six energy projects worth $5 million and one railway project which is approximately $6.8 billion. Mansoor told journalists that Pakistan would be willing to raise a mix of Chinese and US dollar loans from Beijing to execute the CPEC projects.

A desperate Pakistan is bending backwards and is now willing to be flexible on interest rates, foreign currency and tenor of the loan amounts. Earlier Islamabad was insisting on taking a dollar loan from Beijing on one per cent rate of interest. Now it has diluted those terms to two per cent rate of interest in both Chinese and the US currency–a big step backwards.

Outstanding dues to Chinese power companies

Pakistan has to pay Rs 250 billion to Chinese power companies for the power it has purchased. Pakistan is stuck for payments because the Chinese are charging them high prices for the power produced while the people are unwilling to pay steep power bills.

With Pakistan saddled with payments of Rs 250 billion to Chinese companies the latter have stopped work on three plants–Gwadar power plant, Karo power plant and the Kohala power plant. Mansoor said the Chinese want guarantees that future power plants will also not get stuck in Pakistani debt, reports Pakistani newspaper The News.

The ambitious CPEC

Part of China's Belt and Road Initiative (BRI), the CPEC is a massive joint infrastructure project that envisages the construction of road and rail networks, dual-use ports, power generation companies and trade and commerce zones. While Pakistan wants to build infrastructure, China wants to open up access for itself into the Arabian Sea by linking its Xinjiang region to Pakistan's Gwadar Port.

However, the expensive CPEC has become a millstone around Pakistan's neck due to expensive Chinese projects, higher rates of interest on Chinese loans and the fact that local communities are violently opposing CPEC as they find it exploitative.

The Baloch nationalists have attacked Chinese projects and nationals in a bid to derail the project. They say that both China and Pakistan are exploiting the Baloch people and sucking out their resources.