China seeks additional guarantees before sanctioning USD 6 billion loan for rail project in Pakistan
Islamabad, Dec 23: China has sought additional guarantees before sanctioning a USD 6-billion loan for the Main Line-1 (ML-1) railway line project in Pakistan, due to the country's weakening financial position, according to a media report on Wednesday.
China has also proposed a mix of commercial and concessional loans to fund the rail project, going against Islamabad's wishes of 'cheapest lending'.
The issue of additional guarantees was raised during the third joint ML-1 Financing Committee Meeting held ten days ago (December 13), The Express Tribune newspaper reported, quoting official documents.
A senior Pakistani official involved in the negotiations said China raised the additional guarantees issue during the meeting but did not make it part of the draft of minutes shared with Pakistan.
The draft minutes have not yet been signed by both the countries.
The ML-1 project includes dualisation and upgrading of the 1,872-km railway track from Peshawar to Karachi and is a major milestone for the second phase of the China-Pakistan Economic Corridor (CPEC).
The official said China raised the additional guarantees issue to get clarity over Pakistan's financial condition after it applied for debt relief from the G-20 countries, which is only meant for the world's poorest nations.
The third round of financial negotiations gave further clarity on the Chinese position on USD6 billion lending for the USD6.8 billion strategically important ML-1 project of Pakistan Railways, sources in the Ministry of Economic Affairs said.
As part of debt relief from G-20 countries, Pakistan cannot secure expensive commercial loans, except those allowed under the International Monetary Fund and World Bank framework.
The Chinese authorities have proposed that "keeping in view the financial situation in Pakistan so also the conditions laid down by the G-20 regulations for debt suspension, the government of Pakistan may provide additional guarantee mechanism for the loan other than sovereign loan for the ML-1 project", according to officials privy to the negotiations.
It was surprising for us when China raised the issue of additional guarantees during the meeting, another senior Pakistani official who was part of the meeting said.
In August this year, the Executive Committee of National Economic Council (ECNEC) approved the strategically important ML-1 project worth USD 6.8 billion.
The ECNEC meeting had continued for hardly 20 minutes, leaving many critical issues about financing and technical details unresolved.
Both the sides have reached broad-based consensus on the technical parameters, including bidding documents, according to deliberations that took place in the joint bilateral third financial and seventh technical committee of ML-1 project.
But an early start of construction work on what the official described as strategically important project is unlikely after China linked the civil works with prior finalisation of financing mechanism of the single-largest project of the CPEC.
Unlike Pakistan's expectations of getting the USD 6 billion loan at 1 per cent interest rate, China has proposed a mix of commercial and concessional lending, the sources said.
China maintained that the lending will be both a combination of commercial and concessional loans, according to sources.
The Economic Affairs Ministry had proposed a 1 per cent rate while the Ministry of Railways was inclined to take the mix of commercial and concessional rate, subject to the condition that the average rate may remain lower than 2.38 per cent, sources said.
However, Pakistan was expecting that due to the strategic nature of the project, China would accept its request for 1 per cent interest rate and a grace period of 10 years for repayment of the loan.
China has offered to finance 85 per cent of the project cost with payback period of 15 years to 20 years in biannual tranches. Sources said the Chinese had offered a five years grace period.
Pakistan has asked for up to 90 per cent of financing and was ready to accept a 20 years repayment period, subject to the condition that the grace period should be 10 years.
The Chinese side proposed that negotiations for financing must be only to the extent of package-1 consisting of USD 2.434 billion and the negotiation for remaining two packages will be undertaken during the implementation phase of package-I, according to the official documents.
Pakistani authorities pressed for negotiation for the total project cost of the ML-1. China has also offered financing in Chinese currency Renminbi (RMB).
According to the ML-1 framework agreement, the project will be executed in the engineering, procurement and construction mode by Chinese contractors. Under the CPEC framework, ML-1 is the only strategic project being finalised as part of the initial USD46 billion deal.
Sources said that Pakistan's desire to start work on the package-1 from January 2021 would remain unfulfilled due to delay in finalisation of financing details.
Pakistan had planned to complete the package-I from January 2021 to December 2024 and will cover the construction of a 527-km track between Peshawar, Rawalpindi and Lahore, according to the paper.
The CPEC is part of China's One Belt, One Road initiative, a global infrastructure development strategy to invest in nearly 70 countries and international organizations. India has expressed concern over the projects as a portion of the CPEC runs through Pakistan-occupied Kashmir, violating Indian sovereignty.
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Delhi court sentences Haryana gangster Vikas Gulia, associate to life imprisonment
New Delhi (PTI): A Delhi court has sentenced Haryana gangster Vikas Gulia and his associate to life imprisonment under MCOCA provisions, but refused the death penalty saying the offences did not fall under the category of 'rarest of the rare cases'.
Additional Sessions Judge Vandana Jain sentenced Gulia and Dhirpal alias Kana to rigorous imprisonment for life under Section 3 (punishment for organised crime) of the Maharashtra Control of Organised Crime Act (MCOCA).
In an order dated December 13, the judge said, "Death sentence can only be awarded in 'rarest of the rare cases' wherein the murder is committed in an extremely inhumane, barbarous, grotesque or dastardly manner as to arouse umbrage of the community at large."
The judge said that on weighing the aggravating and mitigating circumstances, it could be concluded that the present case did not fall under the category, and so, the death penalty could not be imposed upon the convicts.
"Thus, both the convicts are sentenced to undergo rigorous imprisonment for life and to pay a fine of Rs 3 lakh each, for committing the offence under Section 3 of MCOCA," she said.
The public prosecutor, seeking the death penalty for both the accused, submitted that they were involved in several unlawful activities while they were on bail in other cases.
He argued that the accused had shown no respect for the law and acted without any fear of legal consequences, and therefore did not deserve any leniency from the court.
The court noted that both convicts were involved in offences of murder, attempt to murder, extortion, robbery, house trespass, and criminal intimidation. Besides, they had misused the liberty of interim bail granted to them by absconding.
It said, "The terror of the convicts was such that it created fear psychosis in the mind of the general public, and they lost complete faith in the law enforcement agencies and chose to accede to the illegal demands of convicts. Despite suffering losses, they could not gather the courage to depose against them."
The court noted that Gulia was involved in at least 18 criminal cases, while Dhirpal had links to 10 serious offences.
It underlined that MCOCA had been enacted "keeping in view the fact that organised crime had come up as a serious threat to society, as it knew no territorial boundaries and is fuelled by illegal wealth generated by committing the offence of extortion, contract killings, kidnapping for ransom, collection of protection money, murder, etc."
Both accused persons had been convicted on December 10 in a case registered at Najafgarh police station. The police filed a chargesheet under Section 3 (punishment for organised crime) and 4 (punishment for possessing unaccountable wealth on behalf of member of organised crime syndicate) of MCOCA.
