The deal further cements ties between Pakistan and China at a time when Pakistan is nervous about waning US support as troops pull out of Afghanistan.
Pakistan and China, both nuclear-armed nations, consider each other close friends. Their ties are underpinned by common wariness of India and a desire to hedge against US influence in South Asia.
Documents seen by Reuters show that China has promised to invest around $33.8 billion in various energy projects and $11.8 billion in infrastructure projects.
The deal says the Chinese government and banks, including China Development Bank, and the Industrial and Commercial Bank of China Ltd (ICBC), one of China’s ‘Big Four’ state-owned commercial banks, will loan funds to Chinese companies, who will invest in the projects as commercial ventures.
Major Chinese companies investing in Pakistan’s energy sector will include China’s Three Gorges Corp, which built the world’s biggest hydro power scheme, and China Power International Development Ltd.
Under the CPEC agreement, $15.5 billion worth of coal, wind, solar and hydro energy projects will come online by 2017 and add 10,400 MW of energy to the national grid, officials said.
An additional 6,120 MW will be added to the national grid at a cost of $18.2 billion by 2021. “In total we will add 16,000 MW of electricity through coal, wind, solar and hydel plants in the next seven years and reduce power shortage by 4,000 to 7,000 MW,” said Asif.
The CPEC deal also includes $5.9 billion for road projects and $3.7 billion for railway projects, all to be developed by 2017. A $44 million optical fibre cable between China and Pakistan is due to be built.