China blocks funding to 3 CPEC projects in Pakistan over ‘graft’

China has temporarily stopped funding of three projects related to the road network under the China-Pakistan Economic Corridor (CPEC) till a decision regarding "new guidelines" is issued from Beijing, reports on Tuesday said.

China has decided to stop funding at least three major road projects in Pakistan, being built as part of the $50 billion CPEC, following reports of corruption, a decision that has left officials in Islamabad "stunned", local media reported.

The decision by the Chinese government is likely to hit over Pakistani Rs1 trillion ($9 billion) worth of road projects of the Pakistan's National Highway Authority (NHA), and initially may delay at least three such ventures, the Dawn new newspaper reported.

According to a senior Chinese government official, the funds would be released after Beijing issues ''new guidelines''.

The CPEC, a flagship project of China's prestigious One Belt One Road, passes through Pakistan-occupied Kashmir (PoK). It links China's restive Xinjiang region with Pakistan's equally restive Balochistan province.

The projects to be affected include the 210-km Dera Ismail Khan-Zhob Road at an estimated cost of 81 billion Pakistani rupees, Dawn online reported.

Of this, 66 billion Pakistani rupees was supposed to be spent on construction of road and 15 billion Pakistani rupees on land acquisition. The second project was 110-km Khuzdar-Basima Road and 19.76 billion Pakistani rupees were estimated to be spent on it.

The 8.5 billion Pakistani rupees 136-km remaining portion of Karakarom Highway from Raikot to Thakot was also impacted.

All three projects were originally part of the government's own development programme but in December 2016, the spokesman of the NHA announced that they are to be included under the CPEC umbrella to become eligible for concessionary finance from China.

A Pakistan government official told Dawn that funds for the three road projects were approved in the 6th Joint Coordination Committee (JCC) meeting for the CPEC held last year, pending necessary procedural formalities.

It was expected that the funding of the three projects would be finalised during the Joint Working Group (JWG) meeting held on 20 November, but Pakistan was informed in the meeting that "new guidelines" will be issued from Beijing under which a new modus operandi for release of the funds will be described.

The decision of the Chinese government was conveyed to Pakistan in the JWG meeting and the existing procedure for release of funds had been abolished.

The official said the Pakistani side was left "stunned" when told of the development.

He, however, claimed that Chinese side was disturbed with increasing news reports being published in Pakistan regarding corruption in the CPEC projects and that was the reason behind Beijing temporarily halting release of funds for the corridor.