Pakistan and China may sign a framework agreement for the construction of a western route road project during the upcoming Joint Cooperation Committee (JCC) meeting but chances of finalising a financing agreement for the $6.8 billion Mainline-I (ML-I) project remain low.
Federal Minister for Planning and Development Asad Umar on Thursday reviewed the preparatory work before the 10th meeting of JCC – the highest bilateral decision-making body of the China-Pakistan Economic Corridor (CPEC), according to an official statement.
JCC meeting, which was earlier scheduled for the end of current month, may now take place by mid-November. Some of the joint working groups (JWGs) – bilateral forums that refine proposed projects for JCC – could not meet on schedule, which delayed the JCC meeting for a couple of weeks.
“Under the JWG on Transport and Infrastructure, Asad Umar agreed in the meeting to take up DI Khan-Zhob highway project with the Chinese side for funding in the meeting of the respective JWG,” said the Ministry of Planning and Development.
China has agreed to finance the project and a framework agreement for the 210km DI Khan-Zhob project worth at least Rs76 billion can be signed during the upcoming JCC meeting, according to government officials.
The 210km-long route lies on the western route of CPEC and has been declared as the highest priority scheme in both the 8th JCC and 9th JCC meetings. Other deliverables for the 10th JCC could be groundbreaking ceremony of the Rashakai Special Economic Zone (SEZ) and some progress on realignment of the Karakoram Highway-II project could also be shown.
However, financing agreement for the $6.8 billion strategically important ML-I project of CPEC may not be finalised during the upcoming JCC meeting. Both Pakistan and China attach high priority to the ML-I project, which will be constructed by taking a Chinese loan equivalent to 85-90% of the total cost, depending on China’s willingness.
Pakistan had shared a tentative financing term sheet for the ML-I project with China in April this year and requested the loan at the lowest rate of 1%, according to sources. Chinese authorities have shown reluctance to provide the loan at this rate and final decision may be taken at the highest political level in China.