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Pakistan government to abolish controversial CPEC body; concerns over rising debts

Significantly, almost 37 percent of the power projects built under the CPEC remain non-functional as the payments to Chinese contractors remain stalled, the new cabinet noted in the first meeting held this week on the CPEC

Apr 22, 2022
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Pakistan government to abolish controversial CPEC body

The new government in Pakistan led by Prime Minister Shehbaz Sharif has decided to abolish the China-Pakistan Economic Corridor Authority, the country’s Planning Minister Ahsan Iqbal said. The body set up during the previous government has remained controversial as it bypasses other regulatory bodies overseeing CPEC projects. 

First enacted through an ordinance in 2019, the CPEC Act was later passed in parliament in 2021, making the body responsible for planning and coordinating all projects related to China’s flagship $70 billion China-Pakistan Economic Corridor.  

The move is yet another step to roll back the many controversial decisions taken during the previous government of Imran Khan, who was ousted from the power through a no-confidence vote in Parliament last week. 

The PML-N, the main ruling party, has always opposed setting up a parallel body and blamed it for the wastage of resources. “It is a redundant organization with a huge waste of resources which has thwarted speedy implementation of the CPEC,” Planning Minister Iqbal was quoted as saying by The Express Tribune.

Significantly, almost 37 percent of the power projects built under the CPEC remain non-functional as the payments to Chinese contractors remain stalled, the new cabinet noted in the first meeting held this week on the CPEC.  Ironically, the authority was established to fast-track the CPEC projects that the Chinese had complained had been facing inordinate and costly delays 

Earlier the government had tried re-negotiating, though unsuccessfully, the pricing of electricity produced by projects built under the PPP model with Chinese contractors.  

Sharif, in his speech earlier this week, had warned about the power crisis as the government failed to operationalize most newly built power projects. Despite incurring huge circular debt, successive governments in Pakistan continued offering subsidies on electricity, putting the health of the country’s power sector at risk. 

According to Daily Pakistan,  Chinese power producers have shut down 1,980 megawatts of production capacity due to non-clearance of dues that amount to 300 billion rupees and three imported coal-fired power plants have closed one of their two units due to the non-availability of the fuel. 

(SAM)

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