Pakistan is the second country in a few days to cancel a deal with China. Beijing wants sovereign guarantees, but refuses public tenders. Concerns are raised about the quality of Chinese equipment. The use of Chinese workers displaces locals, causing a significant political fallout.
Islamabad (AsiaNews/Agencies) – China’s Belt and Road Initiative appears to have hit a snag. After Nepal, Pakistan pulled the plug on a multibillion dollar project with China.
Last week, Islamabad decided to pull out of the US billion Diamer-Bhasha dam with Beijing because it refused to accept the strict deal conditions.
The project will go on ahead anyway as the South Asian nation will finance the project – which will generate 4,500 megawatts (MW) of hydropower – itself.
Full transparency – through competing public tenders – of the adequacy, suitability and quality of the Chinese equipment being used could soon become a serious problem for Beijing.
On 14 November, Nepal cancelled a deal with the Chinese state-owned Gezhouba group for the Budhigandaki Hydroelectric project, which included the construction of one of the country's largest hydroelectric power plants.
According to Peter Guy, a former official with the World Bank, these cancellations illustrate the problems that countries will encounter when dealing with the Chinese concept of infrastructure investment.
First of all, such deals cannot be analysed as investments in the conventional financial sense. They are not even donations or credit but sales of equipment and infrastructure construction.
In view of the situation, for Guy, international best practices dictate that these power plants need to be put out to public tender.
The importation of tens of thousands of Chinese workers to install Chinese equipment also displaces the employment for locals, which leads to significant political fallout.
It is increasingly clear that China needs sovereign guarantees, which commit recipient States to certain responsibilities. However, asking for them in non-transparent bidding process arouses suspicion of corruption.
The Belt and Road Initiative looks good, until each country closely examines their financial commitment to receive infrastructure.