China investing $20 billion in Pakistan


ISLAMABAD: China is demanding that all mega power projects, including the Bhasha Dam, Gaddani and Lakhra coal plants, the Tarbela Extension project and many transmission lines, be handed over to China without any international bidding process, and Beijing will directly invest $22 billion in Pakistan.


The Nawaz Sharif government is eager to accept this huge Chinese offe, and a loophole in the PPRA rules is being used to hand over all these mega projects to China.


“Beijing will extend the preferential and medium term soft loans of $22 billion to Pakistan against the guarantees of the government of Pakistan”, a senior official who was part of the recent meeting of the Pak-China Joint Working Group (JWG) held on January 7-8 in Beijing told The News.


“We have carved out a plan to capitalise on the opportunity that Beijing has extended to Pakistan. Under the plan, Chinese companies will be offered the coal and hydropower and huge transmission line projects under a direct contracting regime which is not against the PPRA rules,” the official said.


The Ministry of Water and Power has already sent a summary to the Law Division for vetting. The vetted summary allowing the mechanism ofadoptingthe direct contracting regime will then be sent to the Ministry of Finance for a final nod. In case of no objection, the projects will be given to the Chinese companies.


The Chinese companies have, the official said, refused to take part in international competitive bidding (ICB) to get the contracts in Pakistan’s power sector arguing if Pakistan wants funding from Beijing for various projects, then it will also have to hand over the projects.


Top officials in the power ministry have found a way out of introducing a direct contracting regime, which is permissible in the PPRA rules, to accommodate the desire of Chinese companies.


In the Joint Working Group meeting held in Beijing an 18-member Pakistan delegation took part. The meeting was co-chaired by Wu Xinxiong, of the Energy Administration (NEA) of China and Khawaja Muhammad Asif, Federal Minister for Water and Power.


Beijing offered the huge credit line based on insurance to promote and sustain the development of Chinese energy projects in Pakistan.


During the recent visit to China, the Three Gorges Corporation extended an offer for 100 percent funding for Pakistan’s most strategic project, the Diamer-Bhasha Dam, worth $11.8 billion that will have a capacity to store 8 million acre feet of water and generate 4,500 MW of electricity. The Chinese company said it will provide the whole funding but the project should be handed over to it without holding any International Competitive Bidding (ICB).


The said company showed its willingness to immediately release $5 billion to Pakistan for the Diamer-Bhasha Dam so that it could start constructing the dam.China has also offered to install the coal power project of 660 MW in Gaddani and 2×600 MW coal based projects in Thar and 2×600 MW coal based project in Lakhra.


Pakistan needs almost $16 billion investment to develop the Power Park of 600 MW in Gaddani with jetting and a transmission line. China has also offered to provide $4 billion for evacuation of 6,600 MW through the transmission line, but it demanded the handing over of the project of transmission lines.


China also offered $700 million for the Tarbela extension V project which if completed will provide 1,400 MW electricity at cheaper rates. The Tarbela Extension IV project of 1,400 MW is already under way and will be completed by 2017.