Pakistan awards $2 billion Karakoram Highway contract to China

The Economic Coordination Committee (ECC) of the Cabinet, under the chairmanship of Federal Minister for Finance and Revenue, Senator Muhammad Aurangzeb, convened at the Finance Division today to deliberate on several crucial economic matters.

The meeting saw the participation of key ministers, including Abdul Aleem Khan, Minister for Privatization, Mussadiq Masood Malik, Minister for Petroleum, Sardar Awais Khan Leghari, Minister for Power, and Ali Parvez Malik, Minister of State for Finance & Revenue, along with senior officials from relevant ministries.

One of the central points of discussion was the Ministry of Communications’ summary regarding the “Execution of Framework Agreement between China and Pakistan on the Realignment of the Karakoram Highway (KKH) from Thakot to Raikot under the China-Pakistan Economic Corridor (CPEC).”

The ECC, after thorough deliberation, granted permission to the Ministry of Communications and the National Highway Authority (NHA) to proceed with the provisions of the Framework Agreement.

This project, which focuses on the realignment of the Thakot-Raikot section spanning 241 kilometers, falls under Phase II of CPEC. The approval was granted in accordance with Rule-5 of the Public Procurement Rules, 2004, ensuring adherence to necessary procedural requirements.

Additionally, the ECC reviewed another proposal from the Ministry of Communications concerning the “Chakdara-Timergara, 39 Km Road Project (N-45).”

It was highlighted that Rule-5 of the Public Procurement Rules, 2004, could be invoked following the ECC’s authorization and after consultation with relevant stakeholders. The committee, therefore, authorized the Ministry of Communications and the NHA to proceed with procuring consultancy services for Section-1 of the Chakdara-Chitral Road Project.

In a significant move, the ECC also approved revisions to the Home Remittances Incentive Schemes, as proposed by the State Bank of Pakistan (SBP). The revisions include changes to the Reimbursement of Telegraphic Transfer (TT) Charges Scheme and the Incentive Scheme for Exchange Companies (ECS).

Under the new scheme, the flat reimbursement rate of SAR 30 per eligible transaction will be divided into fixed and variable components. The variable component will be linked to the incremental growth in remittances, allowing banks to receive higher rewards based on their performance.

Similarly, the ECS incentive scheme will see an increase in the base rate for the fixed component from PKR 1 to PKR 2 per USD surrendered, with the variable component also being tied to remittance growth.

The ECC anticipates that these revisions will further incentivize banks and exchange companies to boost remittance inflows, thereby strengthening the country’s foreign exchange reserves.