In the upcoming crucial meeting of the Pak-China Joint Energy Working Group (JEWG), authorities in Islamabad intend to ask Beijing to establish a $10 billion energy infrastructure fund.
The moot is scheduled for May 2-4 and will be a follow up to the JEWG meeting held in Beijing in August last year. At that meeting, China had conditioned its investment in the water and power sector on the suspension of Public Procurement Regulatory Authority (PPRA) rules.
The Chinese interlocutors had then insisted that Beijing would fund entirely only those projects that were handed over to its companies without International Competitive Bidding (ICB). China had also sought guarantees against exchange rate variation from Pakistan. Beijing insisted that since the dollar is on a downward slide vis-a-vis the yuan, the loan should be renminbi-denominated.
However, officials privy to behind-the-scenes developments in Islamabad say, both demands have been shot down. At the upcoming meeting, the government is to tell the Chinese delegation headed by its energy minister that Pakistan cannot suspend PPRA rules for fear of scaring off Chinese investment. Instead, the Pakistan authorities hope to persuade Beijing to take part in the bidding process in key water and power sector projects.
The bid-winning Chinese company should use the $10 billion energy infrastructure fund instead of arranging finances itself, said the official. This will ensure speedy commissioning and construction of the projects.
Further, said the official, the finance division has also refused to authorize renminbi-denominated deals. As such, he said, the upcoming dialogue is bound to fail unless President Asif Zardari or Prime Minister Yusuf Raza Gilani step in to sanction both Chinese demands.
During the three-day meet, Pakistan is hoping to pitch key projects that require Chinese assistance such as Sindh Engro Mining and Power Project, Sonda Jherruk Coal Project, AES Imported Coal Project, Diamer Bhasha Hydropower Project, Neelum Jhelum Hydropower Project, Kohala Hydropower Project, Bunji Hydropower Project, Suki Kinari Hydropower Project, Kotli Hydropower Project, Madyan Hydropower Project, Nandipur Combined Cycle Thermal Power Project, Chichoki Mallian Combined Cycle Thermal Power Project and other projects.