The Chinese government and banks will finance Chinese companies to build $45.6 billion worth of energy and infrastructure projects in Pakistan over the next six years, according to new details of the deal seen by Reuters on Friday.
The Chinese companies will be able to operate the projects as profit-making entities, according to the deal signed by Prime Minister Nawaz Sharif during a visit to China earlier this month.
At the time, officials provided few details of the projects or the financing for the deal, dubbed the China-Pak Economic Corridor (CPEC).
China has promised to invest around $33.8 billion in various energy projects and $11.8 billion in infrastructure projects.
The deal says the Chinese government and banks, including China Development Bank and the Industrial and Commercial Bank of China Ltd, one of China’s ‘Big Four’ state-owned commercial banks, will loan funds to Chinese companies, who will invest in the projects as commercial ventures.
“Pakistan will not be taking on any more debt through these projects,” said Pakistan’s minister for water and power Khawaja Asif.
Sharif signed more than 20 agreements during his trip to China earlier this month, including $622 million for projects related to the deepwater, strategically important Gwadar port, which China is developing.
Pakistan sees the latest round of Chinese investments as key to its efforts to solve power shortages that have crippled its economy.
Blackouts lasting more than half a day in some areas have sparked violent protests and undermined an economy already beset by high unemployment, poverty and violence. Under the CPEC agreement, $15.5 billion worth of coal, wind, solar and hydro energy projects will come online by 2017, adding 10,400 megawatts of energy to the national grid, officials said.
