ISLAMABAD:
Pakistan on Friday approved to pay $11.6 million in compensation to the Chinese nationals who either had lost their lives or were wounded in a terrorist attack.
It also agreed to give 56% shares of a government company to the UK by converting a 14-year-old grant into equity.
The decisions were made by the Economic Coordination Committee (ECC) of the cabinet. It was remotely chaired by Federal Finance Minister Shaukat Tarin.
“The ECC, after deliberation and considering the depth of our relationship with China, approved the proposal of payment of $11.6 million as a goodwill gesture on [the] government level,” read a statement issued by the finance ministry.
Pakistan has agreed to make the payment to remove an irritant in relations, as it was not legally bound to a pay a penny to any Chinese citizen who was killed or wounded in the terrorist attack.
A total of 10 Chinese national lost their lives and another 26 were hurt in a suicide attack on a bus that was carrying them to the work site of the Dasu Hydropower Project in July last year.
After the Chinese contractor suspended work and demanded $37 million in compensation, the government had worked out four different compensation amounts ranging from $4.6 million (Rs810 million) to $20.3 million (Rs3.6 billion).
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The government agreed to pay $11.6 million (Rs2 billion) by taking into account the compensation paid to Chinese workers in 2004 and inflated the old number by using purchasing power parity based GDP per capita.
The amount is double than what China gives to its citizens who die in similar attacks in its territory.
UK grant
The finance ministry also presented a summary to the ECC to resolve the issue of the reversal of Foreign Commonwealth and Development Office (FCDO) of the UK unspent grant equal to Rs2 billion. The UK had given that amount in 2008.
The money remained unspent for over a decade because of the mismanagement by the officials of the State Bank.
The finance ministry proposed that a new Credit Guarantee Company (CGC) should be established and the UK should be given 56% shares equal to Rs7.3 billion (present value of the grant) against the unspent amount in it. The remaining 44% shares will be held by Pakistan.
The UK will control its share in CGC through Karandaaz, according to the ministry’s proposal. The UK owns the Karandaaz — an entity that had been set up to give small loans.
However, official documents revealed that there was no mention of the Karandaaz in the memorandum of understanding (MoU) signed between Pakistan and the UK for management of the grant.
The UK had provided £50 million as grant or Rs2 billion in 2008 to support small and medium companies in Pakistan. The agreement had been signed in July 2008 with the UK’s Department for International Development. However, now it is being given shareholding worth Rs7.3 billion.
In December 2020, the ECC had also approved to sell the majority stake in the government-owned company to the UK through its controlled entity by converting “grant” into equity in a legally questionable manner.
At that time, it had been proposed that the UK should be given 51% shares in the Pakistan Credit Guarantee Company (PCGC), which had been set up in 2019 for the purpose.
The Express Tribune had then reported irregularities in the deal and subsequently the federal cabinet had shelved the proposal.
After The Express Tribune reported the issue, the matter was referred to the law ministry for opinion.
