China has halted funding of projects particularly those related to the road network under the China-Pakistan Economic Corridor (CPEC).  The situation is likely to stay that way, till further decision regarding ‘new guidelines’ to be issued from Beijing, a senior government official told our freelance journalist on Monday.  Earlier visible cracks on CPEC project were seen as Pakistan removed Daimer-Bhasa project from CPEC without informing the Chinese authorities. 

The decision might have an effect on road projects over Rs1 Trillion of the National Highway Authority (NHA). The impact of the delay is not clear, but it is confirmed that at least three road projects are going to be impacted and will have noticeable delays.

Dera Ismail Khan-Zhob Road.

This one of the road projects under CPEC which will be affected by the delay. It is a 210Km road with a total estimated cost of Rs 81 Billion. The major break down is Rs 15 Billion for land acquisition and Rs 66 Billion for Construction of the road.

N-30 Khuzdar-Basima Road

This road under CPEC is expected to cost Pakistan Rs 19.76 Billion. It is a 110Km road whose feasibility study was prepared by national engineering services.

Karakoram Highway (KKH) from Raikot to Thakot

This road project is 280Km long and is from Raikot to Thakot. It was declared to be part of CPEC in December last year. At present partially constructed the 136-km remaining portion of Karakoram Highway (KKH) from Raikot to Thakot will be impacted. The total cost of the project is Rs 8.5 Billion.

Originally all these projects were originally part of the government’s own development programme. In December 2016, the NHA spokesman announced that these projects are being included under the CPEC and will be financed by China with concessions.

Stoppage of CPEC funds

The funds for the three road projects were approved last year in the 6th JCC meeting. Only procedural formalities were pending from both sides. It was anticipated that the funding of the three projects would be completed during the Joint Working Group (JWG) meeting held on 20 Nov 2017.  However, in a recent meeting, Chinese informed officials of Pakistan that new guidelines will be issued from Beijing, which will spell out the new modus operandi for the release of the funds.

This decision was conveyed to Pakistan in the JWG meeting by the Chinese side. The existing procedure of release of funds thus stands abolished by the Chinese. Under the abolished procedure, six different forums used to approve the project for the funds to be released. As per the Chinese, the procedure was meant for only early harvest projects and not for future projects. Hence, for future projects, a fresh procedure will be announced soon. A junior official present at the meeting stated that the Pakistani officials were nearly stunned on hearing this decision of Beijing.

Effects CPEC delay

It can be easily predicted that the new procedure will have a much wider impact than these three projects. The Chinese side also expressed its displeasure over reports of corruption being published in Pakistan over CPEC projects. This seems to be one of the major reasons for stoppage of release of funds to projects in Pakistan.

The three projects which were affected were included into CPEC to ensure seamless connectivity between Khunjerab and Gwadar, and these regions in Gilgit Baltistan, and Baluchistan. This will not only delay the projects also might have a deeper impact on mobilisation plans of Pakistan Army.  At present Pakistan Army extensively engaged in insurgency operations against Baluchi people in the western province of Baluchistan.  This delay is likely to affect move plans of its forces from western front to eastern front in case of hostilities with India. This development may not be what it seems but a major setback in defense posture of Pakistan.