Pakistan has requested the Chinese government to remove issues impeding the completion of seven energy and infrastructure projects worth around $12 billion.
This was shared by Special Assistant to the Prime Minister (SAPM) on CPEC Khalid with local media reporters 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” Mansoor said.
Reports state that the SAPM on CPEC revealed that Islamabad was willing to accept get a mix of Chinese and US dollar loans from Beijing to execute the projects under CPEC.
“We have sought Chinese support for six energy and one infrastructure projects – the Mainline (ML-1) scheme of the Pakistan Railways. The cost of the energy projects is $5 billion and the minimum estimated value of the ML-1 scheme is $6.8 billion,” he said.
He added that he had taken up the matter with Chinese ambassador in Islamabad and with his support, written two separate letters to NDRC for the resolution of issues hampering the financial close of the energy projects as well as the term sheet for the ML-I project.
It may be mentioned here that the ML-I project is facing a delay of over four years whereas the two countries have been discussing financing terms for the past two years.
“The Chinese government is seeking sureties that these new power plants are also not stuck in circular debt,” he revealed, adding that the government was actively working to clear Rs250 billion payments of Chinese firms on account of power purchase that were stuck in the circular debt.
Media reports claim that Chinese lenders were ready to provide funds for the above projects but Sinosure had to give insurance policy.
China Export and Credit Insurance Corporation — Sinosure — has to underwrite all foreign investments and debts but has been holding back insurance cover of about $5 billion to six major power projects of over 3,500MW under CPEC, a report by Dawn states.
In total, the Chinese state insurer needs to clear about $13 billion insurance cover of energy and infrastructure projects on priority basis.
Mansoor has said that Pakistan was waiting for a term sheet from China for the finalisation of the loan agreement, adding that Islamabad would demonstrate flexibility on the interest rates, foreign currency and tenor of the loan amounts.