Secretary Ministry of Water and Power Muhammad Younus Dagha has said that Pakistan is of the early recipients of the One-Belt-One Road initiative of Chinese President His Excellency President Xi and the Government of Pakistan has developed a policy framework, which is flexible enough to provide for all forms of assistance to the initiative.
He was addressing International Infrastructure Investment Forum 2016 at Beijing, China on Thursday. The Secretary said that Chinese Government’s Belt and Road initiative is a right step in the right direction. He said that AIIB (Asia Infrastructure Investment Bank), is yet another initiative by China, which will provide access to concessional financing for high-priority infrastructure projects which may not be of interest to commercial investors.
Mr. Younus Dagha said that matching the aspirations of a developing nation for achieving higher and rapid growth for their economies provides a daunting challenge for the policymakers to provide enabling policy framework for financing the required infrastructure. He said that Pakistan has been framing policies to facilitate financing in its infrastructure projects especially in the Energy Sector since 1994. We are working with many international investor companies, which are providing electricity to the Grid on Built-Operate-Own-Transfer basis since 1990s and early years of this century.
The Secretary said that the effectiveness of Pakistan’s policy framework can be judged from the current situation where the Chinese contractors are enthusiastically bidding for all categories of the infrastructure projects in Pakistan, from Roads to Railways and from Coal Power Plants to the clean energy projects.
They are now actively working with us to extend the scope of their involvement into Telecom and Transmission projects, he added.
Mr. Dagha said that the forms of financing available for these projects are of all possible types; which include outright investment as well as the projects where the contractors arrange the financing. In many cases where the financing has been arranged by the project sponsors, he said the Chinese companies only participate as contractors without any financing obligations. Such projects are mostly where the financing has come from the public sector development outlay but in many cases the financing also comes from foreign banks, other than the Chinese.
Mr. Younus Dagha said that when Pakistan’s economy was struggling with the challenge to finance power plants to meet the large energy deficit in 2013, the Chinese government offered the China-Pakistan-Economic-Corridor (CPEC) initiative worth 46 billion US Dollars, through which the Chinese Government, its companies and contractors will invest or get finance for all types of infrastructure projects which includes 10400 MWs from 14 power projects (ranging from Coal to Hydro-electric as well as wind and solar), Gas pipeline, Sea port, Airport, Railways and Roads. This in addition to the already on-going projects in Pakistan, both in public and private sectors, provide attractive opportunities for the Chinese contractors, he added.
The Secretary said that it is then not surprising that a Chinese company is the lead investor in 1320 MWs Coal fired power plant at Port Qasim and at the same time an EPC contractor at a Public Sector 1200 MWs Gas-based Power Project at Haveli Bahadur Shah. Another Chinese company is becoming the largest IPP (Independent Power Producer) in Pakistan by its three projects on Jehlum River cascade, which will bring more than 3000 MWs of Clean hydropower and also 200MWs of Wind projects under construction. He said that there are numerous Chinese Companies, which are currently working in Pakistan since past several years and have found the experience improving with every new policy framework. The growing portfolio of infrastructure projects in Pakistan keeps on satisfying their appetite, he added.
The Secretary said that growing capacity of the Chinese infrastructure contactors also present a challenge for the Chinese policymakers to provide for more flexible access to finance, especially for their projects in the developing countries.