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Islamabad to seek $10bn energy infrastructure fund

In the upcoming crucial meeting of the Pak-China Joint Energy Working Group (JEWG), authorities in Islamabad intend to ask Beijing to establish a $10 billion energy infrastructure fund.

The moot is scheduled for May 2-4 and will be a follow up to the JEWG meeting held in Beijing in August last year. At that meeting, China had conditioned its investment in the water and power sector on the suspension of Public Procurement Regulatory Authority (PPRA) rules. The Chinese interlocutors had then insisted that Beijing would fund entirely only those projects that were handed over to its companies without International Competitive Bidding (ICB). China had also sought guarantees against exchange rate variation from Pakistan. Beijing insisted that since the dollar is on a downward slide vis-a-vis the yuan, the loan should be renminbi-denominated.

However, officials privy to behind-the-scenes developments in Islamabad say, both demands have been shot down. At the upcoming meeting, the government is to tell the Chinese delegation headed by its energy minister that Pakistan cannot suspend PPRA rules for fear of scaring off Chinese investment. Instead, the Pakistan authorities hope to persuade Beijing to take part in the bidding process in key water and power sector projects. “The bid-winning Chinese company should use the $10 billion energy infrastructure fund instead of arranging finances itself,” said the official. “This will ensure speedy commissioning and construction of the projects.”

Further, said the official, the finance division has also refused to authorize renminbi-denominated deals. As such, he said, the upcoming dialogue is bound to fail unless President Asif Zardari or Prime Minister Yusuf Raza Gilani step in to sanction both Chinese demands.

During the three-day moot, Pakistan is hoping to pitch key projects that require Chinese assistance such as Sindh Engro Mining and Power Project, Sonda Jherruk Coal Project, AES Imported Coal Project, Diamer Basha Hydropower Project, Neelum Jhelum Hydropower Project, Kohala Hydropower Project, Bunji Hydropower Project, Suki Kinari Hydropower Project, Kotli Hydropower Project, Madian Hydropower Project, Nandipur Combined Cycle Thermal Power Project, Chichoki Mallian Combined Cycle Thermal Power Project, 500 KV Transmission Line for evacuation of power from 747 MW Guddu Power Project, 220 KV Transmission line to transmit power from 404 MW UCH- II Thermal Power Project, 500 KV Transmission Line Project for dispersal of power from Sindh Engro Thar Coal Power Project, 500 KV Transmission Line Project for Neelum Jhelum Hydropower Project, 500 KV Transmission Line Project for evacuation of power from Tarbela Hydropower Fourth Extension Project, mapping of renewable energy resources (such as wind, solar, biomass, waste, geothermal, small and micro hydel projects) in new geographical areas of Pakistan, technology transfer for wind and other renewable energy projects, support, technology transfer, standardization, of off-grid and decentralized renewable energy applications and geothermal mapping of Pakistan, and the Geological Survey of Pakistan’s project to geologically map Pak-China border areas at a 1:50,000 scale.

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