Islamabad: Government has decided to increase the cost of projects under the China-Pakistan Economic Corridor (CPEC) by one percent in order to finance the expenditures that would be due to special security and the increase in cost will be reflected in the end consumers’ tariff.
The Ministry of Water and Power (MoWP) is in the process of making the summary for the Economic Coordination Committee (ECC) of the cabinet seeking approval for increasing one percent cost n every project in order to arrange financing for the current expenditures in the head of security.
Pakistan has already raised Special Security Division (SSD) in order to ensure four-layer security of around 15,000 foreigners working on around CPEC which will connect the Gwadar Port to China’s northwestern Xinjiang province. The projects under CPEC are to be provided full security since some influential countries are there to damage the project.
China and Pakistan agreed to raise the special force to have full security to the CPEC sea routes and the Gwadar Port. This SSD consists of over 13,731 security personnel who would protect 9,000 Chinese workers working on 330 small and mega projects in the country. Pakistan also deployed 30,434 security personnel for successful execution these projects.
Top official of the ministry said that, “Yes, we are currently in process of making summary that will be placed before the ECC for approval of increasing every project’s cost by one percent. ”
CPEC would have power sector projects of $34 billion and for their security, national exchequer is not strong enough to arrange the financing which is why this has been included in the cost of the project which will be reflected in the tariff. The Private Power Infrastructure Board (PPIB) has also suggested that the ministry raise one percent increase in the cost of every project without the approval of ECC for the provision of security expenditures in the power purchase agreement of each project, but this clause was not activated. Now the cost of those projects whose financial closures are finalised, will also be increased by one percent.
As far as the power sector is concerned, one percent of power sector project valuing $34 billion will be increased meaning then that one percent would be over Rs35 billion that will be embedded in the total cost. And that additional cost will be charged from consumers through electricity bills. Officials say that 1-2 paisa per unit cost will increase which will not affect the consumers too much.
The officials also say that the security component will not be included in the cost of CPEC projects but would also be embedded in the cost of the projects out of the CPEC initiative. The cost of $1.353 billion of 700 kilometer Gawadar-Nawabshah LNG pipeline which is not under CPEC would also increase by one percent for catering to the security expenditures. The additional one percent cost will be charged from the bulk LNG consumers through the LNG tariff. CPEC roads network will ensure security on sustainable basis and the additional cost of the security will also be charged through toll tax.