Islamabad: As per legal provisions, the Government of Pakistan is to repay debts incurred by the China-Pakistan Economic Corridor (CPEC) by providing foreign currency, according to a news source. These debts are to be repaid to Chinese financial institutions by investors of power plants and for the repatriation of profits. This was determined in a bilateral agreement between the two countries.
This agreement on CPEC Energy Projects Cooperation was signed between the government of Pakistan and the government of China in 2014 and gives legal cover to the rights of investors and their financiers. As per workings by the Ministry of Planning, Pakistan would have to pay USD 40 billion to China in debt servicing and dividends established under the CPEC project.
Out of this, USD 7.5 billion will be paid against the USD 5.9 billion in principal loans for infrastructure projects. Nearly USD 20 billion will serve to repays Chinese financial institutions, and USD 11.3 billion will be paid as dividends to the investors of power plants.
