Skip to main content

IMF request for CPEC contract details declined

By Shahbaz Rana

Published: September 29, 2018


ISLAMABAD: The International Monetary Fund (IMF) is looking for contract details of the China-Pakistan Economic Corridor (CPEC) projects amid the West’s deepening interest in the strategic arrangement between the two “all weather” friends.

The visiting IMF delegation raised the issue of CPEC deals during a meeting with the officials of the Ministry of Planning and Development, according to the sources.

The Pakistani side was led by Federal Minister for Planning, Development and Reform Makhdoom Khusro Bakhtiar.

“The ministry gives an overview of the macroeconomic outlook and progress on the CPEC initiative to the IMF team,” said the sources.

Proposing Saudi Arabia as CPEC partner

The IMF staff-level delegation is visiting Pakistan to assess the country’s macroeconomic situation. Its Washington-based Mission Chief, Harald Finger, is leading the delegation that comprises officials from the fund’s Lending Policy Division.

The sources said the IMF delegation inquired about the contract agreements of the energy projects of CPEC. However, the ministry did not provide any information, arguing that only the Ministry of Energy has the details.

The sources said the government was under no obligation to provide details of the CPEC contracts to a third party, particularly when there was no formal arrangement with the IMF at this stage.

“The disclosure of Chinese financing deals under CPEC has been described as one of the disadvantages of going for an IMF bailout programme during a briefing to Prime Minister Imran Khan,” said the sources.

The PTI government is currently assessing its options to arrange about $11 billion loans to deal with the external-sector problems. Among the options are IMF programme, Chinese financial assistance and oil on deferred payments from Saudi Arabia.

The issue of the progress on CPEC projects and official bilateral flows from China also came up for discussions during the plenary meeting between the IMF and Finance Minister Asad Umar, which was held on Thursday, the sources said.

CPEC has remained a matter of interest for international financial institutions and the western countries since its launch in 2014. Initially, the size of the CPEC portfolio was $46 billion which, after the inclusion of some new projects, has grown to $60 billion.

The US embassy officials also raised the issue of transparency in CPEC deals during their interaction with the Ministry of Finance officials on Friday.

Pakistan has already brushed aside criticism on growing indebtedness of the country due to CPEC, saying the share of the CPEC loans was only $6 billion or 6.3% in total outstanding external debt of $95 billion as of end June this year.

“The CPEC deals are open and transparent,” said Noor Ahmad, a spokesman for the Ministry of Finance.

“The IMF delegation was informed that at present, 22 projects worth $28.6 billion were under various phases of implementation in CPEC,” said Hasaan Daud Butt, the CPEC project coordinator.

The planning minister informed the IMF delegation that Pakistan was exploring the possibility of completing the $9 billion mainline project of Pakistan Railways on the build-operate-transfer (BOT) basis.

Over a year ago, the IMF had done an in-depth analysis of CPEC as part of Article-IV consultations.

The IMF report has then stated that the CPEC infrastructure and transport projects are financed by long-term concessional government borrowing from China. It adds that the CPEC projects in the energy sector involve foreign direct investment and commercial borrowing from Chinese financial institutions, either by majority foreign-owned joint ventures or Chinese investors.

But the fund’s report has mentioned risks to Pakistan’s debt sustainability It underlines that the CPEC-related outflows would peak at about $3.5 billion to $4.5 billion per annum by fiscal year 2024-25.

Austerity axe falls on CPEC, Gwadar projects

More than one and half years ago, the Ministry of Energy had provided financing details of eight energy projects having cumulative generation capacity of 7,880 megawatts and being set up at a cost of $12.54 billion.

Their sponsors have obtained $9.5 billion loans at an interest rate of London Interbank Offered Rate (Libor) plus 4.5%, according to these documents. The debt to equity ratio for all these eight projects is 75% debt and 25% equity except in case of Karot hydro power project where the debt ratio was shown at 80%.

Besides, the China Export and Credit Insurance Corporation (Sinosure) would charge 7% fee on the insurance of the loans given to these companies.

Pakistan and China had signed the CPEC Energy Framework Agreement in November 2014.

However, return on the equity in case of coal-fired power plants was between 27.2% and 34.49%. It was almost double than the standard 17% rates. In case of hydel-based projects, the internal rate of return (IRR) was 17%.


Popular posts from this blog

SSG Commando Muddassir Iqbal of Pakistan Army

“ Commando Muddassir Iqbal was part of the team who conducted Army Public School operation on 16 December 2014. In this video he reveals that he along with other commandos was ordered to kill the innocent children inside school, when asked why should they kill children after killing all the terrorist he was told that it would be a chance to defame Taliban and get nation on the side. He and all other commandos killed children and later Taliban was blamed.
Muddassir Iqbal has deserted the military and now he is  with mujahedeen somewhere in AF PAK border area”
For authenticity of  this tape journalists can easy reach to his home town to interview his family members or   ISPR as he reveals his army service number”
Asalam o Alaikum: My name is Muddassir Iqbal. My father’s name is Naimat Ali. I belong to Sialkot divison (Punjab province), my village is Shamsher Poor and district, tehsil and post office  Narowal. Unfortunately I was working in Pakistan army. I feel embarrassed to tell you …

CPEC Jobs in Pakistan, salary details

JOBS...نوکریاں چائنہ کمپنی میںPlease help the deserving persons...Salary:Salary package in China–Pakistan Economic Corridor (CPEC) in these 300,000 jobs shall be on daily wages. The details of the daily wages are as follows;Welder: Rs. 1,700 dailyHeavy Duty Driver: Rs. 1,700 dailyMason: Rs. 1,500 dailyHelper: Rs. 850 dailyElectrician: Rs. 1,700 dailySurveyor: Rs. 2,500 dailySecurity Guard: Rs. 1,600 dailyBulldozer operator: Rs. 2,200 dailyConcrete mixer machine operator: Rs. 2,000 dailyRoller operator: Rs. 2,000 dailySteel fixer: Rs. 2,200 dailyIron Shuttering fixer: Rs. 1,800 dailyAccount clerk: Rs. 2,200 dailyCarpenter: Rs. 1,700 dailyLight duty driver: Rs. 1,700 dailyLabour: Rs. 900 dailyPara Engine mechanic: Rs. 1,700 dailyPipe fitter: Rs. 1,700 dailyStorekeeper: Rs. 1,700 dailyOffice boy: Rs. 1,200 dailyExcavator operator: Rs. 2,200 dailyShovel operator: Rs. 2,200 dailyComputer operator: Rs. 2,200 dailySecurity Supervisor: Rs. 2,200 dailyCook for Chinese food: Rs. 2,000 dailyCook…

The Rise of China-Europe Railways

The Rise of China-Europe RailwaysMarch 6, 2018The Dawn of a New Commercial Era?For over two millennia, technology and politics have shaped trade across the Eurasian supercontinent. The compass and domesticated camels helped the “silk routes” emerge between 200 and 400 CE, and peaceful interactions between the Han and Hellenic empires allowed overland trade to flourish. A major shift occurred in the late fifteenth century, when the invention of large ocean-going vessels and new navigation methods made maritime trade more competitive. Mercantilism and competition among Europe’s colonial powers helped pull commerce to the coastlines. Since then, commerce between Asia and Europe has traveled primarily by sea.1Against this historical backdrop, new railway services between China and Europe have emerged rapidly. Just 10 years ago, regular direct freight services from China to Europe did not exist.2 Today, they connect roughly 35 Chinese…