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HomeBusinesschina pakistan: CPEC project in PoK hits roadblock over tax issue

china pakistan: CPEC project in PoK hits roadblock over tax issue


The China financed China Pakistan Economic Corridor () has hit a major roadblock over an energy project in Pakistan occupied Kashmir (PoK).

A Chinese company could halt the construction of a mega hydro-power project under CPEC in PoK over local tax, ET has learnt. The Chinese company has asked Pakistan to immediately address the issue related to the adoption of a 1% fixed tax by the PoK on the offshore procurement contract of the 1,124-megawatt Kohala Hydropower Project.

“If the issue is not resolved, the Chinese may drop this project from the CPEC’s list of projects,” leading Pakistan English Daily ‘Dawn’ reported last week quoting a local Pakistani official. Several times in the past, India has raised with China the issue of projects financed by it in PoK as those projects violate India’s sovereignty.

The reasons for CPEC’s slowdown have been the pandemic, no major new Chinese commitment, pending payments of Chinese power plants to the tune of Rs230 billion and delays in the financial close of the Karachi-Peshawar railway line (ML-1) upgradation project.

In Beijing, the Chinese Foreign Ministry admitted that CPEC is facing headwinds due to the pandemic but claimed that it is making progress. Going forward, the two countries will focus on industries, science and people’s welfare as part of CPEC, according to the Chinese Foreign Ministry.

Meanwhile, Chinese Ambassador to Pakistan, Nong Rong met Pakistani army chief General Qamar Javed Bajwa last Wednesday to discuss CPEC, work on which has slowed down due to security issues and Pakistan’s inability to pay Chinese companies. The meeting comes ahead of Prime Minister Imran Khan’s upcoming three-day visit to China from February 3-5 to attend the opening ceremony of the 2022 Winter Olympics and hold bilateral talks.

Two major attacks last year, including the bomb attack on a Chinese workers’ bus near the Dasu hydropower plant in July and the attack on a hotel in Quetta in April where the Chinese envoy had been staying during a trip to the provincial capital, has intensified Chinese apprehensions.


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