ISLAMABAD: As Prime Minister Imran Khan prepares for a three-day official visit to China in the first week of February 2022, Prime Minister’s Office, Ministry of Foreign Affairs, Ministry of Planning, Development and Initiatives Board of Investments (BoI) have started interactions with other line ministries to finalize the agenda for the Prime Minister’s meetings with Chinese leaders and private sector companies.
Knowledgeable sources said company registrar that in addition to the highest-level geopolitical and defense cooperation, the Prime Minister will have high-level interactions with the Chinese private sector to attract investment in the second phase of CPEC.
The sources said that the Board of Investment has been instructed by the National Security Division (NSD) to collect the data of notable Chinese companies with a definite investment plan in Pakistan.
According to the BoI, during the Prime Minister’s next scheduled visit to China, the top executives of the shortlisted companies will meet to provide assurance of their investment plan in Pakistan which is at an advanced stage.
BoI CPEC Section wrote letters to Federal Secretaries of Sixteen Ministries, Secretary, BoI AJ&K, Secretary of Industries, Department of Trade and Labor, Gilgit Baltistan, Investment Board CEOs and trade from Punjab, KP and Balochistan.
However, no such information has been requested from the government of Sindh despite the fact that several renewable energy mining and coal power projects are underway in Sindh with Chinese investment.
The BoI, which is under the direct administrative control of the Prime Minister’s Office, has requested all federal secretaries and provincial investment-related organizations to share information/data with contact details of focal points of all Chinese companies that have approached the ministry/department in the recent past with a defined investment plan or who are at an advanced stage to invest in Pakistan.
The Ministry of Planning, Development and Special Initiatives, which is in charge of the CPEC authority, has asked the Ministry of Energy (Energy Division) to share three main “demands” related to the energy sector. electricity to be discussed during senior-level engagement with the Chinese government.
The top three “asks” will be prepared as a brief description, Benefits for Pakistan, Benefits for China, Steps required from Pakistan side for implementation and Steps required from Chinese side for implementation.
Currently, Chinese companies that are already in the power business are facing payment issues, non-cooperation from government organizations/departments, tax-related issues, extending letters of intention and, more importantly, bribes to previous leaders and a mantra that Chinese projects are 25% more expensive than international standards. Chinese companies have made it clear that Sinosure, China’s loan insurance company, is reluctant to provide loan guarantees due to financial problems in Pakistan’s power sector.
The issue of Sinosure insuring Chinese loans is a major reason for delays in advancing projects in the pipeline and under construction. Six projects worth $5 billion are facing delay due to Sinosure’s non-approval.
Power Division, sources said, will propose to the Prime Minister to ask the Chinese leadership to spread the duration of the power project loans, so that Pakistan can repay the loans over a longer period as the Chinese are not ready to reduce tariffs on the grounds that if they do it in Pakistan then they should also do it in other countries. 5,300 MW power projects worth $13 billion have already been set up under CPEC phase-I.
The sources said payment of at least $35 million to the Chinese company is sought as compensation for the Chinese workers killed and injured at the Dasu hydropower project. A technical committee headed by the joint secretary of the Water Resources Division is about to finalize the compensation program, which will be shared with the Chinese authorities. The company has yet to start working on the project at full strength but has promised to be back the second or third week of next month (February).
The Prime Minister’s Office has also asked the Department of Commerce for a clear path forward to increase the target from $2.3 billion to $10 billion in two years by separating products into the following two categories: (i) products that are already exported and need expansion; and (ii) development products requiring interventions for export. For each product category, the MoC should propose a list of necessary interventions as well as the potential value that will be added and the main exporters.
Issues related to the development of Gwadar port, barriers to establishing the LNG terminal in Gwadar, provision of basic facilities will also be part of the discussions.
The prime minister will invite Chinese companies to special economic zones (SEZs), a few of which are ready but others face several hurdles. Chinese companies have filed complaints of undue delay in government-level approvals.
The issue of the ML-1 railway project will also be on the agenda for discussions as there is a big difference in the cost of the feasibility study for the $9.2 billion project as officials Pakistanis say it should not exceed $6.8 billion.
The sources said that CPEC-II will focus on export growth (textile, IT, etc.) and import substitution (steel, agricultural productivity, etc.). The Prime Minister, sources said, would urge Chinese companies to invest in Pakistan’s agricultural sector as some companies have already shown interest in investing in the agricultural sector in Balochistan and South Punjab.
Copyright Business Recorder, 2022