Pakistan Needs To Pay $40b on $26.5b CPEC investments To China In Next 20 years

Pakistan is liable to pay China $40 billion during the course of the next 20 years in the form of ‘repayments’ of dividends and debt on $26.5 billion dollar investment under the flagship CPEC (China Pakistan Economic Corridor), as the documents of Ministry of Planning and Development reveal. Presenting the breakdown of this $39.83 billion dollars, the debt repayment of energy and infrastructure projects amounts up to $28.43 billion dollars.

According to the official estimates, the rest of $11.4 billion has to be paid in the shape of dividends to the investors. However, the figures are still significantly less than the estimates and projections by some private institutions. The prime reason for it is that the cash flows have been worked out on the basis of the initial investment, that is $26.5 billion.

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It suggests that contrary to the claims of initial $50 to $62 billion investment under CPEC, the original investment is likely to remain half of the initially announced investment figures. The only significant project that can materialize in the coming few years is Mainline – I Project of Pakistan Railways, worth $8.2 billion.
The cost of the Mainline project has not been included in the estimate.  The estimates where shared with the IMF (International Monitory Funds) by The Ministry of Finance during the previous month, as confirmed by a government’s spokesman on CPEC affairs. (Source: Express Tribune). According to these conservative estimates, Pakistan on average will return $2 billion dollars on a yearly basis.

The said are the first comprehensive estimates of inflows. CPEC portfolio significantly comprises of infrastructure schemes being undertaken by government and energy projects being set up by investors. The government loans of $5.9 billion have been signed at an interest rate lying between low 2% to as high as 5.2%. There are three government loans that total up to $774 million, have been secured to 5.2% interest rate.

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