Pak cuts CPEC investment in railways by USD 2 bn citing huge burden of loans

Pak cuts CPEC investment in railways by USD 2 bn citing huge burden of loans
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ISLAMABAD: Pakistan has slashed the Chinese investment in railways by USD 2 billion citing a huge burden of loans, giving credence to reports that the new government led by Prime Minister Imran Khan may scrutinise the multi-billion dollar CPEC, a media report said on Tuesday.
Pakistan’s Railways Minister Sheikh Rasheed Ahmad said that the share of the China-Pakistan Economic Corridor (CPEC) in the railways has been reduced from USD 8.2 billion to USD 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 USD 8.2 billion to USD 6.2 billion. The CPEC is like the backbone for Pakistan, but our eyes and ears are open,” he said.
The announcement gives credence to reports that the new government led by Khan intends to scrutinise the USD 62 billion infrastructure and power projects, which the PML-N government had initiated under the CPEC.
The Express Tribune reported that CPEC’s investment share for Pakistan Railways was USD 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.
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.
Railways Minister Sheikh Rasheed Ahmad, however, said that the CPEC share has been reduced to USD 6.2 billion.
“Pakistan is a poor country that cannot afford huge burden of the loans,” Rasheed told a news conference in Lahore.
“Therefore, we have reduced the loan from China under the CPEC for rail projects from USD 8.2 billion to USD 6.2 billion. The CPEC is like the backbone for Pakistan, but our eyes and ears are open,” he said.
Rasheed said the government remains committed to the Karachi-Peshawar project but he wishes to further reduce the cost to USD 4.2 billion from USD 6.2 billion.
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 USD 62 billion in financing but the new PTI government is more cautious about the Chinese investment.
The 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 the BRI projects, warning that the loans could turn into debt traps for poor countries unable to pay them back. Beijing denies the claims, saying the loans are a win-win situation for both the countries.