Business Recorder: Chinese companies are reportedly reluctant to invest in CPEC

The reason for this reluctance is the non-fulfillment of the terms and conditions agreed with existing companies working on the CPEC.

 

Gwadar Port, Gwadar, Balochistan. The port is the most important element in the China-Pakistan Economic Corridor (CPEC). (Getty Images)
Gwadar Port, Gwadar, Balochistan. The Gwadar Port is the most important element in the ambitious China-Pakistan Economic Corridor (CPEC). However, the second phase of CPEC is progressing at a very slow rate due to problems. (Getty Images)

Chinese companies are reportedly hesitant to invest in the second phase of the China-Pakistan Economic Corridor (CPEC).

The reason for this reluctance is the non-fulfillment of the terms and conditions agreed with existing companies working on CPEC.

Gwadar Port, Gwadar, Balochistan.
Gwadar Port, Gwadar, Balochistan.

This was reported by the business magazine Business Recorder.

According to details, the new Chinese companies are hesitant as the agreements with the existing Chinese companies have not been honored “in letter and spirit and on a sustainable basis.”

The main factor discouraging Chinese investors is the issue of overpayment.

The overdue amounting to the Chinese companies is around ₨. 220 billion. The representative of these companies visit the Power Division time and again but in vain.

The Pakistani authorities state that they are unable to clear the dues due to the ever-expanding circular debt that is now close to ₨. 2.3 trillion.

The Business Recorder cited sources who interacted with the authorities. It was revealed that the Government of Pakistan is unable to clear the entire due amount of ₨. 220 billion at once.

The government is now trying to clear the dues opted to pay other independent power producers (IPPs). This is done in two installments: 40% and 60%.

The flags of the People's Republic of China and the Islamic Republic of Pakistan.
The flags of the People’s Republic of China and the Islamic Republic of Pakistan.

It is pertinent to note that the existing Chinese investors have shown patience, and not a single company has issued a default notice to the Pakistani government.

However, these unfortunate developments are making new Chinese investors think twice before investing in the CPEC.


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