Narrative
Full Description
Project narrative
On January 1, 2017, China’s Ministry of Commerce and the Government of Pakistan signed an interest-free loan agreement worth RMB 1.1 billion (or $140 million or PKR 14.7 billion) for the construction of Gwadar East Bay Expressway. The borrowing terms include a 20-year maturity, a 10-year grace period, and a 0% interest rate. Gwadar deep-sea port was originally connected by a narrow 16 feet wide thoroughfare of Gwadar town at the West-Bay. The Gwadar Eastbay Expressway consists of a new 6-lane expressway and a 30 meters-wide railway corridor that will connect Gwadar Port to Makran Coastal Highway (or National Highway N–10 or Makran沿海公路N-10). The project was developed as part of the 'Early Harvest' scheme of China Pakistan Economic Corridor (CPEC), and it was part of a wider PKR 170.667 billion ($1.6 billion) development package for the city and Port of Gwadar. China Communications Construction Engineering Company was the contractor responsible for project implementation. Its work was overseen by the Gwadar Port Authority. On November 22, 2017, construction of the expressway began. As of November 2018, project completion was expected to occur by October 2020. The expressway was ultimately opened to traffic on June 3, 2022. A handover ceremony took place in July 2022. The Gwadar Eastbay Expressway is now fully operational. There was disputes between the Pakistan Navy and the Pakistani Government over the handover of plots of land that are under the 40-year lease of Gwadar Port. The Navy vacated 500 of 584 acres a part of the agreement in 2014, then eventually conceded 12 more acres in 2019 for construction of the Gwadar Eastbay Expressway.
Staff comments
1. One source indicates that the loan agreement was signed on May 13, 2017 rather than January 1, 2017. This issue requires further investigation. 2. Different sources record different financial amounts for this project: Pakistani Ministry of Finance Economic Affairs Division yearbook reports the project has a total interest-free loan of $168 million. The Shahid Javed Burki Institute of Public Policy at NetSol records a commitment amount amount of US$141 million. The 2016 Government of Pakistan Bond Prospectus lists the estimated project cost as $140 million. We use the most conservative of these estimates for the time being. 3. Since borrowing terms of the interest-free loan are unavailable, AidData has set maturity to 20 years by default and grace period to 10 years by default per China's Foreign Assistance White Paper (http://www.cidca.gov.cn/2018-08/06/c_129925064_3.htm), which states that the maturity of interest-free loans is 20 years, with a drawdown period of 5 years, grace period of 5 years, and repayment over 10 years. AidData treats the drawdown period as providing 5 years of additional grace.