ISLAMABAD: Pakistan has signed a $6.5 billion ‘concessionary loan’ agreement with China for projects under civil nuclear cooperation, including development of two power plants near Karachi of 2,200MW, Prime Minister Nawaz Sharif said here on Wednesday.

“This is a very big loan that China has extended. It is very cheap and will ensure uninterrupted power supply,” he said at a briefing on the economic situation for members of his cabinet and the media.

Finance Minister Ishaq Dar made a detailed presentation.

But the prime minister made it clear that nuclear power projects usually take a long time to complete, like hydropower projects such as Dasu, Diamer-Bhasha and Bunji.

Finance Secretary Dr Waqar Masood Khan said a major part of the loan was concessionary for 15-20 years and some commercial, for 10 years.

Mr Dar chipped in that the loan agreement signed with the Exim Bank of China was at an average interest rate of 3-4 per cent and there was a moratorium on repayments for the first three years.

Replying to a question, the prime minister conceded that not only with Iran but Pakistan’s trade with many regional and friendly countries, including Afghanistan, China and Turkey, was not up to the mark and required to be increased.

The finance minister said the government was making efforts to resolve the issue of non-payment of electricity dues with the provinces.

He said a proposal was under consideration to transfer the power companies at book value to the provinces and revive the office of federal adjustor for clearance of bulk energy dues.

INFLATION: While conceding inflationary pressure, the finance minister presented copies of two summaries the caretaker government had approved for increasing electricity tariff and raising Rs190bn in taxes under a commitment with the IMF that had been shelved by former president Asif Ali Zardari.

These decisions were required to be taken by the PPP and caretaker government to pass on the natural impact of energy tariff to the people but these were kept frozen for more than 15 months and “now they are doing politics on inflation”, he said.

Mr Dar said the government had taken a bold decision to clear the backlog, resulting in inflation, but conceded that it had not been successful in improving energy sector recoveries.