Planning ministry fires back at critics of CPEC debt

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ISLAMABAD: The Ministry of Planning, Development and Reforms on Wednesday rebuffed a news article regarding the China Pakistan Economic Corridor (CPEC) debt, published in a section of press, terming it “incorrect, baseless and biased”.

“It is hereby clarified that CPEC is a flagship and most active project of the Belt and Road Initiative with finances comprising of government-to-government loans, private investment and grants,” it said in a statement. “As many as 22 projects are currently in various stages of implementation. The government’s financial liability is only to the tune of $6 billion, comprising low-interest loans and grants in infrastructure projects spread over 20 to 25 years payback period. Therefore, giving the impression $40billion as a liability on Pakistan is false, baseless and distorted.”

The ministry stated that energy projects are being executed purely under Independent Power Producers (IPPs) mode and finances are mainly taken by private companies against their own balance sheets. Therefore, it added, the debt would be borne by the investors instead of any obligation on part of the Pakistani government.

“The dividends of the energy sector projects are also based on profit and loss and are subject to individual company’s financing policies. Debt accruing is also amortized in the financial structure and is included in the project viability analysis and business plans of the private enterprise. Therefore, CPEC is not imposing any burden with respect to loans repayment and energy sector outflows,” the statement read.

CPEC outflows would start from the year 2021 and spread over 20 to 25 years, the ministry stated, adding that the resultant benefits of these investments to the Pakistan economy would far outweigh these outflows.

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