China to invest in Gwadar-II project ISLAMABAD: Chinese Prime Minister Wen Jiabao is arriving on a three-day official visit to Pakistan beginning today. Pakistan and China are set to sign 18-19 bilateral agreements to expand trade, investment and economic relations as well as consolidate strategic relations in the field of defence production.
Some of the most significant deals to be formally inked during the visit include the deepening of Gwadar deep seaport, Chashma-II Nuclear Power Project, 963 MW Neelum-Jhelum Hydropower Project, Mangla Dam Raising, Thar Coal, Lowari Tunnel and trade deal to facilitate move towards a Free Trade Agreement (FTA).
Wen Jiabao and Prime Minister Shaukat Aziz are scheduled to address Pakistan-China Business Forum on April 6, which would open the doors for business-to-business relations that were until now largely confined to government-to-government ties.
Deepening of the Gwadar port, 50 miles west of Karachi, from about 11 metre to 14 metres is a significant development towards making it a hub for trade and trans-shipment in the region. The port offers enormous business opportunities and a potential alternative to the Persian Gulf ports for trade with the Central Asian Republics (CARs).
"The development work of phase-II of the Gwadar port was always under discussion with China," said Dr Abdul Hafeez Shaikh, Minister for Privatization and Investment here Monday. Wasim Haqqi, Chairman Board of Investment (BOI), also confirmed signing of the agreement during the visit of the Chinese premier.
China may offer $70-100 million financing for the project. Pakistan bought Gwadar, a fishing village on the Arabian Sea from the Sultanate Oman in the 1950s. Just four months after the 9/11 events, Pakistan and China agreed to develop a port at this place. The development work on Rs14.9 billion phase-I is in progress with the active involvement of China Harbour Engineering Corporation (CHEC), which also placed skilled workers on the site.
China offered $198 million financial package for this phase, including $49 million grant, and $31 million interest-free loan. Pakistan only provided $50 million equity. The government wants to involve the private sector on BOT/BOO basis in the phase-II of this project, with an estimated cost of $600 million, including 9 new berths (two dedicated oil berths with a capacity to handle 200 DWT oil tankers, and one bulk cargo terminal with a capacity to entertain 100 DWT ships).
China has also financed some of the major road projects from Karachi to Gwadar. Pakistan, with the help of the multilateral institutions, is also working on a regional infrastructure project to link Gwadar with Chaman, and to the CARs via Afghanistan.
The formal signing of $350 million financing for the construction of 300 megawatts Chashma-II Nuclear Power Project on Indus River, 280 km south of Islamabad, was also part of the agenda.
Pakistan and China are also likely to sign a formal protocol paving the way for export of Pakistani rice to China. Senior officials also highlighted the possibility of signing agreements for Chinese cooperation in the Mangla Dam Raising and $1.5 billion Neelum-Jhleum Hydropower Project.
Both the countries also want finalisation of an early harvest programme to finally sign a Free Trade Agreement (FTA). Besides Beijing seeks Pakistan’s support on accession to the WTO. During the visit, Chinese and Pakistani leaders are also likely to discuss steps to facilitate existing border trade and further take measures to conclude a new border trade agreement so as to promote their economic development and social stability, especially in the border areas.
In the field of joint defence production, Pakistan and China have extensive cooperation, which includes tanks, fighter jets and now naval frigates F22P on Transfer of Technology (ToT) basis. Pakistan and China have also ambitious fighter jet plan of JF17 Thunder, or Super-7, which was billed as an alternative of any modern day fighter jet for Pakistan. The Chinese are very keen to expand cooperation in this area, as well as in the aviation sector.
The list of Chinese delegates show visit of President China Aviation Industry Corporation, China National Aero Technology Import & Export Corporation, China Electrical Technology Group, ZTE Corporation and many others. China Mobile, one of the leading telecom giants in China, is actively pursuing sale of Pakistan Telecommunication Corporation (PTCL), which is scheduled for bidding before end-June 2005.
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