Pakistan cuts Chinese investment in key railway project

PTI
Pakistan Published: Oct 02, 2018, 05.05 PM(IST)

File photo: China Pakistan Economic Corridor (CPEC). Photograph:( Zee News Network )

Story highlights

Pakistan's railways minister Sheikh Rasheed Ahmad said that the share of the 'China-Pakistan Economic Corridor' in the country's railways has been reduced from US $8.2 billion to US $6.2 billion.

Pakistan has slashed China's investment in its railways by as much as US $2 billion citing a massive burden of loans. By doing so, Islamabad has given credence to reports that the new government led by Imran Khan may scrutinise the multi-billion dollar corridor it calls 'CPEC' or 'China-Pakistan Economic Corridor'.

Pakistan's railways minister Sheikh Rasheed Ahmad said that the share of the 'China-Pakistan Economic Corridor' in the country's railways has been reduced from US $8.2 billion to US $6.2 billion.

"Pakistan is a poor country that cannot afford huge burden of the loans," Rasheed told reporters in Lahore.

"Therefore, we have reduced the loan from China under the CPEC for rail projects from US 48.2 billion to US 46.2 billion. The CPEC is like the backbone for Pakistan, but our eyes and ears are open," he said about the corridor that passes through Pakistan-occupied Kashmir or PoK.

The announcement gives credence to reports that the new government led by Imran Khan intends to scrutinise the US US $62 billion infrastructure and power projects, which the previous Nawaz Sharif-led government had initiated under the 'CPEC'.

Pakistani newspaper Express Tribune reported that investment under 'CPEC' for Pakistan Railways was US $8.2 billion, which was to be utilised for upgrading Main Line-1 (ML-1) a colonial-era line stretching 1,872 km from Karachi to Peshawar.

The previous railways minister Saad Rafique had termed the upgrading of ML-1 as vital for railways future as it would bring as many as 171 trains on track per day against the current 32.

Rasheed, who currently heads the ministry, said that the government remains committed to the Karachi-Peshawar project but he would like to further reduce the cost to US $4.2 billion from US $6.2 billion, if possible.

Rasheed said he is the biggest supporter of the 'CPEC', but also wants minimum debt burden on railways as the nation has to pay back all the investments.

He, however, was unable to explain, which projects the management has skipped to bring down the investment.

The changes are part of Islamabad's efforts to rethink the key Belt and Road Initiative (BRI) projects in Pakistan, where Beijing has pledged about $62 billion in financing, but the new government is more cautious about the Chinese investment.

The Pakistani government has pushed for deeply concessional loans for the ML-1 project. It has also invited third countries to join or for the Chinese to be investors in the project through the build-operate-transfer model that would rely less on debt.

The US has criticised projects under Xi Jinping's 'Belt and Road Initiative', warning that Chinese loans could turn into debt traps for poor countries unable to pay them back. Beijing denies these claims, saying the loans are a win-win situation for both the countries. However, such loans have backfired for other countries, most recent of which is the Hambantota Port in Sri Lanka.

The so-called 'CPEC' is the flagship project of the multi-billion dollar Belt and Road Initiative, a pet project of Chinese President Xi Jinping, aimed at enhancing Beijing's influence around the world through China-funded infrastructure projects.

India has protested to China over the so-called 'China-Pakistan Economic Corridor', which is being built through Pakistan-occupied Kashmir, which is part of India's northernmost state Jammu and Kashmir.

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