China Eximbank provides RMB 4.8 billion government concessional loan for Sukkur-Multan Section of Karachi-Lahore Highway Project (Linked to Project ID#54415, #54416)

On April 28, 2016, China Eximbank signed three different loan agreements with the Government of Pakistan for the Sukkur-Multan Section of the Karachi–Lahore Motorway Project. The proceeds of the BCL, GCL, and PBC were to be used by the borrower to finance a $2,889,798,643 commercial contract between the Government of Pakistan’s National Highway Authority and China State Construction Engineering Corporation Limited (CSCEC), which was signed on December 25, 2015. The $361,224,830.37 buyer’s credit loan (BCL) agreement [CHINA Eximbank loan ID#1410202052016210417 and Government of Pakistan loan ID#BCL-16MWAY-CPEC] is captured in Project ID #54415. The borrowing terms are as follows: 5.2% interest rate, 20-year maturity, 5-year grace period, 0.75% ($2,709,186.23) management fee, and 0.5% commitment fee. The RMB 4.8 billion government concessional loan (GCL) agreement [CHINA EXIMBANK GCL NO. (2016) 7 TOTAL NO. (576) or Government of Pakistan loan ID#GCL167576-CPEC] is captured in Project ID #39013. The borrowing terms include a 2% interest rate but the maturity and grace period is unknown. The $1,790,113,000 million preferential buyer’s credit (PBC) loan agreement [CHINA EXIMBANK PBC NO. (2016) 10 TOTAL NO. (390) or Government of Pakistan loan ID#PBC1610398-CPEC] is captured in Project ID #54416. The borrowing terms include a 2% interest rate but the maturity and grace period is unknown. The Karachi–Lahore Motorway (KLM) is a 1,694 km (1,053 mile), six-lane, high-speed, limited-access motorway that connects Karachi and Peshawar through Islamabad, Lahore, Multan and Sukkur. It is considered to be a major component of the China-Pakistan Economic Corridor (CPEC). The 387 km, six-lane Sukkur-Multan section of the motorway follows the left bank of River Indus and it involved the construction of 100 bridges, 468 underpasses, 991 culverts, 11 interchanges, six pairs of service areas, five pairs of rest areas, and 24 toll stations. A revised feasibility study was completed for this project on June 18, 2014. China State Construction and Engineering Corporation (CSCEC) was the contractor responsible for project implementation. Construction began on August 5, 2016, and the project was completed on November 5, 2019. There are some indications that the China Eximbank government concessional loan for the Sukkur-Multan Section of the Karachi-Lahore Highway Project financially underperformed vis-a-vis the original expectations of the lender. On or around July 1, 2020, China Eximbank and the Government of Pakistan signed a debt suspension agreement. Under the terms of the agreement, the lender agreed to suspend principal and interest payments due between July 1, 2020 and December 31, 2020 under the government concessional loan agreement for the Sukkur-Multan Section of the Karachi-Lahore Highway Project. Then, on November 19, 2020, China Eximbank and the Government of Pakistan signed another debt suspension agreement [No. DSSI2021PHASE1-030]. Under the terms of the agreement, the lender agreed to suspend principal and interest payments due between January 1, 2021 and June 30, 2021 under the government concessional loan agreement for the Sukkur-Multan Section of the Karachi-Lahore Highway Project. Then, on or around July 1, 2021, China Eximbank and the Government of Pakistan signed another debt suspension agreement. Under the terms of the agreement, the lender agreed to suspend principal and interest payments due between July 1, 2021 and December 31, 2021 under the government concessional loan agreement for the Sukkur-Multan Section of the Karachi-Lahore Highway Project. The debt service suspension (rescheduling) from July 2020-December 2020 is captured via Project ID#96254. The debt service suspension (rescheduling) from January 2021-June 2021 is captured via Project ID#96256. The debt service suspension (rescheduling) from July 2021-December 2021 is captured via Project ID#96253.

Additional details

1. The Chinese project title is 头实施的白沙瓦至卡拉奇高速公路木尔坦至苏库尔段（PKM项目). 2. The Multan-Shujabad section of the highway was inaugurated by the Prime Minister in May 2018. Pakistani news outlet reports that M-3 section from Lahore to Abdul Hakeem was completed and delivered on March 31, 2019. 3. The China Eximbank BCL agreement can be accessed in its entirety via https://www.dropbox.com/s/cwn5k26oip7doci/China%20Eximbank%20Buyer%27s%20Credit%20Loan%20Agreement%20for%20Peshawar-Karachi%20Motorway%20Section%20II%20Project.pdf?dl=0. 4. The November 2020 debt suspension agreement [No. DSSI2021PHASE1-030] for the GCL can be accessed in it entirety via https://www.dropbox.com/s/67n1oq44it27kvu/3.%20Debt%20Suspension%20Agreement%20for%20GCL%20Other%20Projects.pdf?dl=0

Number of official sources

28

Number of total sources

31