ML-1 to be evaluated in detail

The Planning Commission of Pakistan has stressed to evaluate the impact of the huge Chinese loan for it on country’s foreign debt before granting approval to ML-I project under the China-Pakistan Economic Corridor (CPEC). The terms and conditions of the loan should be finalized. This largely depends upon what terms and conditions of the loan are offered by the government of China keeping in view the cash flows of the instant project. One of the most critical decisions for the government of Pakistan is whether the loan will be a central loan or sovereign guarantee loan. The 10 percent of the total cost of the project shall be borne by the government of Pakistan and 90 percent shall be financed from relevant Chinese financial institutions under the CPEC framework. It is the responsibility of Pakistan Railway to clarify as to whether any firm commitment has been conveyed by the government of China through EAD for financing the instant project under CPEC based on the above sharing ratio. Whether all the above aspects have been considered and finalized by concerned agencies of the government of Pakistan and must provide details of the approval of the Framework Agreement. Whether PPRA was consulted before approval and signing of the framework agreement and if so, comments of the Law Division and PPRA should be provided by the sponsoring agency. Moreover, the sponsoring agency should confirm whether it is allowable under the set rules and procedures to conduct limited bidding between Chinese companies/consortia as stated in Article-IV of the framework agreement.  It should confirm that the contents of Article-IV of the framework agreement are not in violation of the Pakistan Engineering Council rules and regulations with regard to foreign contractors’ operations in Pakistan.