Wednesday Sep 23, 2015

China converts $230m loan for Gwadar airport into grant

China converts $230m loan for Gwadar airport into grant
ISLAMABAD: In a major development, China has converted the $230 million loan for the construction of the Gwadar airport into grants, which is scheduled to be completed by December 2017, The News has learnt.

Beijing has also converted $140 million loan for the construction of Eastbay Expressway Project for Gwadar city as interest-free and will get back only the principal loan amount from Islamabad.

“Out of the overall cost of $3.8 billion for infrastructure projects including Gwadar airport, construction of the Lahore-Karachi motorway section from Multan to Sukkur and other projects, the interest payment on Chinese loan was slashed down from over 3 percent to just 1.6 percent,” official sources in the Economic Affairs Division confirmed while talking to ‘The News’ after holding a review meeting on the China Pakistan Economic Corridor (CPEC) projects with Minister for Planning and Development Ahsan Iqbal in the chair here on Tuesday.

After conversion of loan into grants, the authorities concerned have stopped the bidding process for the New Gwadar International Airport as now only the Chinese companies will be awarded construction of this important airport. Beijing will select the company. It is expected that China will designate MOFCOM for undertaking the construction of the New Gwadar International Airport.

In case of possibility of cost escalation, the Chinese side will be requested to increase the size of resource envelop to complete this project within the stipulated time-frame.

When contacted, Gwadar Port Authority (GPA) Chairman Dostain Khan Jamaldini said that they had leased out 2,281 acres of land to the Chinese company responsible for operating this port.

“We have completed all required legal documents while handing over of land will take place by next month,” he concluded.

On contact, Minister for Planning and Development Ahsan Iqbal said that China had brought down its loan cost in a major way in order to accelerate the progress of CPEC. Some loans were converted into grants, some were converted into interest-free so the cost of the overall basket was slashed down to benefit Pakistan, he added.

Official documents available with ‘The News’ reveal that under the CPEC initiative, Beijing and Islamabad had decided to spend $786 million on different important physical projects of Gwadar.

The Gwadar Coal Power Project will be constructed at an estimated cost of $360 million in order to produce electricity of 300MW. So, the overall investment on Gwadar will be more than $1 billion under the CPEC, including one coal power project of 300MW. The construction of infrastructure for Free Economic Zone and Economic Processing Zones port related industries will cost $35 million.

The construction of breakwaters will cost $130 million. The dredging of berthing areas and channels will cost $27 million under the CPEC over the next couple of years. The necessary facilities for a fresh water treatment plant at Gwadar will cost $114 million under the CPEC over the next few years.

One state-of-the-art hospital having 300 bed facilities will be constructed at Gwadar at estimated cost of $100 million. Both the sides also decided to establish a technical and vocational institute at Gwadar at an estimated cost of $10 million.

This story first appeared in The News .