China temporarily stops funding for 3 major CPEC road projects in Pakistan over corruption

In a major blow to Pakistan, China has decided to temporarily stop the funding of at least three major road projects in Pakistan over several reports of corruption in the CPEC projects. Being built as part of the $60 billion China-Pakistan Economic Corridor (CPEC) initiative, the projects were approved in the 6th JCC meeting in 2016. Though funds for these projects were to be decided in the Joint Working Group (JWG) meeting on November 20, Chinese officials told their Pakistan counterparts that Beijing was working on 'new guidelines' before releasing the money, reported Dawn. Pakistan's "all-weather-friend" China's decision to unexpectedly stop funding has left officials in Islamabad "stunned" as the delay could affect over 1 trillion Pakistani rupees worth of road projects of the Pakistan's National Highway Authority (NHA).

The CPEC is a flagship project of China's prestigious One Belt One Road. It passes through Pakistan-occupied Kashmir (PoK) - India had earlier raised a strong objection to the CPEC road project through PoK - and links China's restive Xinjiang region with Pakistan's Balochistan province. The recent decision of the Chinese government will affect 210-km-long Dera Ismail Khan-Zhob Road (estimated cost Rs 81 billion), 110-km-long Khuzdar-Basima Road (Rs 19.76 billion) and 136-km long Karakarom Highway (KKH) from Raikot to Thakot (Rs 8.5 billion). Dawn reported that all three projects were originally part of the government's own development programme, but in December 2016, the spokesman of the NHA announced that they are to be included under the CPEC umbrella to become eligible for concessionary finance from China.

"The funds for the three road projects were approved in the 6th Joint Cooperation Committee meeting held last year, pending necessary procedural formalities. "It was expected that the funding of the three projects would be finalised during the Joint Working Group (JWG) meeting held on November 20, but Pakistan was informed in the meeting that 'new guidelines' will be issued from Beijing under which new modus operandi for release of the funds will be described," the official was quoted as saying by the newspaper.

The decision of the Chinese government was conveyed to Pakistan in the JWG meeting and the existing procedure for release of funds had been abolished, he said. Under the previous procedure, the projects were to be approved by six different forums after which the funds were released, the official added. "In fact, the Chinese authorities informed us that the previous procedure of release of funds was meant for early harvest projects only and new guidelines will be issued for future projects of the CPEC," the official said.

The official said the Pakistani side was left "stunned" when informed about this development, as it was the first time they were hearing it. He, however, claimed that Chinese side was quite disturbed with media reports, published in Pakistan, about corruption in the CPEC projects and and that was the reason Beijing has temporarily halted release of funds for the corridor. CPEC was launched in 2015 when President Xi Jinping visited Pakistan and it now envisages investment of around USD 50 billion in different projects of development in Pakistan.

With PTI inputs