The China-Pakistan CPEC project has a long way to go as Beijing suspends projects
The Covid-19 pandemic, ongoing political unrest and limits on foreign debt have caused a slowdown in Chinese investment in Pakistan, as Beijing suspended projects that are part of the $ 62 billion China-Pakistan Economic Corridor (CPEC). of dollars.
Pakistani Prime Minister Imran Khan, whose government is criticized for being under military control, also faces criticism at home for failing to prioritize and accelerate Chinese investments in high-priced infrastructure, the Asia Times reported.
In 2018, Khan had suspended several CPEC projects that suspected corruption by the previous government. However, two years later, several of his cabinet members were named in major corruption scandals involving the country’s electricity sector. About a third of Pakistan’s power companies are involved in Chinese projects under the CPEC.
The 278-page investigative report, compiled by the Securities and Exchange Commission of Pakistan (SECP) and submitted to Khan in April, uncovered alleged wrongdoing worth more than $ 1.8 billion in subsidies awarded to 16 independent power producers (IPPs). ), including those belonging to Khan’s advisers Razak Dawood and Nadeem Baber, Asia Times said.
The SCEP had also investigated the profits made by Chinese power companies.
The report revealed that Huang Shandong Ruyi Pakistan Ltd (HSR) and Port Qasim Electric Power Co Ltd (PQEPCL) received an overpayment of Rs 483.6 billion (US $ 3 billion).
The Pakistan Democratic Movement (PDM), an alliance of 11 opposition parties, has demanded that the government led by Imran Khan accelerate projects financed by China, especially highway and rail modernization plans that have made almost no progress in the last five months. .
The PDM has also demanded the removal of the chairman of the CPEC Authority, retired Lieutenant General Asim Saleem Bajwa, until he is released from his personal and family business assets in the United States.
Recently, a local outlet had exposed various Bajwa offshore businesses, including more than 100 companies and franchises in the US, UAE, and Canada that his family is involved in.
In 2019, the Prime Minister issued an ordinance to establish a CPEC Authority (CPECA) prior to his visit to China and appointed a former lieutenant general as its president. Previously, the Ministry of Planning and Development used to supervise CPEC projects.
Planning Ministry sources told the Asia Times that China imposed the CPECA on the government, that it wanted the military to participate directly in the CPEC portfolio, as Beijing was reportedly upset with Khan’s slow movement into the more scheme. large.
The sources further said that the recent revelations of Bajwa’s offshore assets had shocked China as it wished to work with the Pakistani military to prevent private corruption.
Following the revelations, Chinese President Xi Jinping’s scheduled visit to Pakistan in September was postponed, citing Covid-19 as the official reason.
Asia Times has reported that the CPEC Authority Ordinance grants the CPECA president and staff immunity from all legal proceedings against them, thereby protecting them from the National Accountability Office (NAB), the Federal Agency for Investigation (FIA) and the police to initiate cases.
“The legality problem of the CPECA, the president’s immunity from legal proceedings, and the controversies of family businesses abroad surrounding the president in office gave a bad impression and must be resolved to improve the efficiency of the CPECA “Senator Mushahid Hussain Sayed, a Muslim League of Pakistan-Nawaz told the leader and chairman of the think tank of the Pak-China Institute to Asia Times.
He further said that the PDM has concerns about the immunity clause of the CPECA.
Attributing the delay of the CPEC project to the coronavirus pandemic, he said: “In addition, the new Chinese ambassador, Nong Rong, comes with a strong economic background that should give CPEC a boost.”
He further said that PDM protests will not affect CPEC’s progress.
“Pressures are emanating from the West and Western institutions, mainly in Washington, against CPEC, but Pakistan has shown the will, willingness and ability to resist these pressures.”
As Chinese workers and engineers working in Baluchistan and Sindh have been attacked and killed in recent weeks, the cost of providing 24-hour security to Chinese citizens is driving up the price of projects at a time when Pakistan’s economy staggers badly, Asia Times said.
Meanwhile, Pakistan had requested an interest rate of 1 percent on the Chinese loan for the ML-1 railway project. However, China is reluctant to comply with the request and instead used “delaying tactics” to pressure Islamabad to continue accepting the high interest rate.
Khan and Bajwa are now reportedly planning to bring the matter up to Chinese President Xi Jinping, who they believe can dictate the terms of the loans from the China Development Bank and the Export-Import Bank of China, in the hope that agreement can be reached on the rail line, Asia Times. said.
The CPEC Joint Coordination Committee (JCC) review meeting, which takes place every month, is unlikely to finalize the ML-1 project at the next meeting, despite Pakistan’s Minister of Railways Shaikh Rasheed Ahmad emphasized that the project is ready.
Asia Times further reported that the Greater Peshawar Mass Transportation Project, Swat Express Way Phase-II and Peshawar-DI Khan Motorway, all nominally under CPEC, have also been delayed and are not on the agenda for the next JCC meeting.
Citing local media reports, the Asia Times quoted Jeremy Garlick, assistant professor at the Jan Masaryk Center for International Studies at the Prague University of Economics and Business, as saying that Beijing was using delaying tactics on ML-1 because it didn’t want to finish. with a bad deal on their hands.
“Beijing does not want to say no to ML-1. She wants to appear committed in Pakistan, but at the same time she is aware of the risk environment for Chinese investments, “he added.