CPEC projects in limbo as China stops funding

China's decision to temporarily stop funding few of the China-Pakistan Economic Corridor (CPEC) projects has particularly led to an adverse impact on projects which are related to the road network.

Citing a senior government official, Dawn reported that China has temporarily stopped the funding of few projects particularly those related to the road network under the CPEC till further decision regarding 'new guidelines' to be issued from Beijing.

The decision could affect over Rs-1 trillion road projects of the National Highway Authority (NHA).

However, initial reports confirm that at least three road projects are going to experience a delay.

According to the Dawn, the projects to be affected include the 210-km Dera Ismail Khan-Zhob Road, at an estimated cost of Rs 81 billion. Of this, Rs 66 billion will be spent on construction of road and Rs 15 billion on land acquisition.

Among the other projects affected are the Rs-19.76 billion 110-km Khuzdar-Basima Road project and the Rs-8.5bn 136-km remaining portion of Karakarom Highway (KKH) from Raikot to Thakot.

All these three projects were originally part of the government's own development programme, but in December 2016, the spokesman of the NHA announced they were to be included under the CPEC umbrella to become eligible for concessionary finance from China, the Dawn reported.

An official said that the funding of the three projects was expected to be finalised during the Joint Working Group (JWG) meeting held on November 20, but Pakistan was informed that the existing procedure for release of funds had been abolished and 'new guidelines' will be issued from Beijing under which new modus operandi for release of the funds would be described.

The official added the Chinese authorities told that new guidelines would be applicable for future projects of the CPEC.

He, however, claimed that Chinese side was quite disturbed with increasing news reports being published in Pakistan regarding corruption in CPEC projects and that was the reason China has temporarily halted release of funds for the corridor.

Several CPEC projects including an USD 8.2-billion project for upgrading main railway lines and a scheme for setting up special economic zones face delays or are in danger of being closed due to the inability of federal and provincial governments to do away with their inefficiencies.

A major Chinese firm bowed out of the USD 590 million Punjab-based 330MW power project project that was scheduled to start electricity production by end-2017.

China has also emerged as the single largest lender of money to Pakistan ever since the two countries decided to undertake the CPEC project a little more than two years back.

The CPEC is intended to rapidly modernise Pakistan's infrastructure and strengthen its economy by the construction of modern transportation networks, numerous energy projects, and special economic zones.