China Offers to Fully Finance Pakistan LNG Terminal, Pipeline Projects

China has offered to fully finance the Gwadar LNG terminal and pipeline project in Pakistan.

According to the agreement signed between the two countries, 85 percent financing was supposed to from China and 15 percent from government of Pakistan.

The agreement was initialised on Thursday by Pakistan’s Inter-State Gas System (ISGS) and China National Petroleum Corporation (CNPC). China Petroleum Pipeline Bureau (CPP), a CNPC group company, will be building the pipeline. CPP will also construct the LNG terminal at Gwadar. The terminal will have a capacity of 500 mmcfd and would be ultimately connected to the Gwadar-Nawabshah pipeline. The projects would involve investment of about $2 billion.

According to The Express Tribune, a local English daily, China has decided to finance the project in full because of Pakistan’s inability to provide the required funds.

The newspaper reported that Pakistani government has collected about $1.8 billion via cess. However, it has spent the money on projects like Metro and Orange Line.

After having weighed Pakistan’s inability to pay for the infrastructure project, the Chinese asked the government to apply for a loan. But the government continued to drag its feet. Left with no alternative, the Chinese have agreed to finance 100 percent of the project, instead of the original 85 percent, The Express Tribune reported.