China-Pakistan Economic Corridor stares into uncertainty as China stops funding over corruption reports

China has decided to temporarily stop funding at least three major road projects in Pakistan, being built as part of the $50 billion China-Pakistan Economic Corridor (CPEC), following reports of corruption, a decision that has left officials in Islamabad "stunned", a media report said on Tuesday.

The decision by the Chinese government is likely hit over Rs 1 trillion-worth road projects of the Pakistan's National Highway Authority (NHA), and initially, may delay at least three such ventures, Dawn newspaper reported.

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

The nearly $60 billion 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 Balochistan province.

The road projects that are likely to be affected include 210-km-long Dera Ismail Khan-Zhob Road, being built at an estimated cost of Rs 81 billion. Of this, Rs 66 billion would be spent on construction of road while Rs 15 billion on land acquisition.

The other project which is going to be hit is 110-km-long Khuzdar-Basima Road, having an estimated cost of Rs 19.76 billion.

The third project is Rs 8.5 billion worth, the remaining 136-km of Karakoram Highway (KKH) from Raikot to Thakot.

Originally, all the three projects were part of the Pakistan government's own development programme, but in December 2016, the NHA spokesperson had announced that they would be included under the CPEC umbrella so as to become eligible for concessionary finance from China.

"The funds for the three road projects were approved in the 6th Joint Cooperation Committee meeting 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 November 20, but Pakistan was informed in the meeting that 'new guidelines' will be issued from Beijing under which new modus operandi for the release of the funds will be described," the official was quoted as saying by the newspaper.

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, he said.

Under the previous procedure, the projects were to be approved by six different forums after which the funds were released, the official added.

"In fact, the Chinese authorities informed us that the previous procedure of release of funds was meant for early harvest projects only and new guidelines will be issued for future projects of the CPEC," the official said.

The official said the Pakistani side was left "stunned" when informed about this development, as it was the first time they were hearing it.

He, however, claimed that Chinese side was quite disturbed with media reports, published in Pakistan, about corruption in the CPEC projects and that was the reason Beijing has temporarily halted the release of funds for the corridor.

CPEC was launched in 2015 when President Xi Jinping visited Pakistan and it now envisages an investment of around $50 billion in different projects of development in Pakistan.