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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South African police arrest suspect in mass shooting that killed 12, including 3 children
Johannesburg (AP): A 32-year-old suspect has been arrested in connection with a mass shooting which claimed the lives of 12 people including three children at an unlicensed pub earlier this month, South African police said on Monday.
The man is suspected of being one of the three people who opened fire on patrons in a pub at Saulsville township, west of South Africa's capital Pretoria, killing 12 people including three children aged 3, 12 and 16.
At least 13 people were also injured during the attack, whose motive remains unknown.
According to the police, the suspect was arrested on Sunday while traveling to Botlokwa in Limpopo province, more than 340 km from where the mass shooting took place on Dec 6.
An unlicensed firearm believed to have been used during the attack was recovered from the suspect's vehicle.
“The 32-year-old suspect was intercepted by Limpopo Tracking Team on the R101 Road in Westenburg precinct. During the arrest, the team recovered an unlicensed firearm, a hand gun, believed to have been used in the commission of the multiple murders. The firearm will be taken to the Forensic Science Laboratory for ballistic analysis,” police said in statement.
The suspect was arrested on the same day that another mass shooting at a pub took place in the Bekkersdal township, west of Johannesburg, in which nine people were killed and 10 wounded when unknown gunmen opened fire on patrons.
Police have since launched a search for the suspects.
South Africa has one of the highest homicide rates in the world and recorded more than 26,000 homicides in 2024 — an average of more than 70 a day. Firearms are by far the leading cause of death in homicides.
The country of 62 million people has relatively strict gun ownership laws, but many killings are committed with illegal guns, according to authorities.
According to police, mass shootings at unlicensed bars are becoming a serious problem. Police shut down more than 11,000 illegal taverns between April and September this year and arrested more than 18,000 people for involvement in illegal liquor sales.
