Pakistan seeks Chinese funding for major energy, infrastructure projects

Pakistan requested China to begin construction on three electricity generation projects totalling 2,100 megawatts and proposed seven infrastructure schemes for Chinese financing, aiming to expand Phase-I of the China-Pakistan Economic Corridor (CPEC).

Under Phase-I of the CPEC, China invested $28 billion in energy and infrastructure projects. The government is now seeking at least $17 billion more for these new schemes.

The government has prepared a plan to reschedule $17 billion in Chinese energy debt, despite China’s reluctance to consider the request.

The request was made during the 13th Joint Cooperation Committee (JCC) meeting, the top decision-making body of the CPEC. 

The Pakistani delegation was led by Minister for Planning Ahsan Iqbal, while the Chinese team was headed by the chairman of Beijing’s National Development and Reform Commission (NDRC).

Islamabad asked China to fund the Diamer Basha dam, Hyderabad-Sukkur motorway, and Mainline-I project of the Pakistan Railways, along with four other roads and bridge projects. 

The total value of these nine energy and infrastructure projects is estimated to exceed $17 billion, including the $4.5 billion cost of the energy schemes.

Addressing concerns about the need for additional capacity when the country faces Rs2.8 trillion in idle capacity payments next fiscal year, Minister for Planning Ahsan Iqbal said the two hydropower projects would be operational in the next six to eight years, by which time electricity demand is expected to rise. 

He also highlighted the necessity of a 300 MW coal-fired power project for Gwadar and nearby areas.

He mentioned that China has raised concerns about the repayment of their Rs523 billion dues for electricity purchases, but payments would depend on improvements in the economic situation.

China has agreed to study a proposal to convert imported coal projects to local coal for power generation, a move that could save $1 billion annually in coal costs and facilitate timely payments to Chinese energy suppliers.

The National Energy Administration of China will visit Pakistan to prepare recommendations to reduce power losses during project construction phases and improve energy efficiency.

Pakistan also proposed seven infrastructure projects for Chinese financing, including the $6.7 billion Mainline-I project of the CPEC. 

Other proposed projects are the Diamer Basha Dam, Panjgor-Mashkoor road, Hyderabad-Sukkur Motorway, Zhob-Quetta road, Quetta-Karachi road, Thakot-Raikot section of the Karakoram Highway, and the Wanghu Tunnel at the M-8 motorway.