ISLAMABAD: The federal government of Pakistan has refused to take on the responsibility for repaying foreign loans being sought by Gilgit-Baltistan for energy projects, raising the spectre of a halt to international lending to the autonomous region.
The issue was highlighted in a meeting of the Economic Coordination Committee (ECC) held in mid-August, according to sources.
In an earlier meeting with the Asian Development Bank (ADB) for financing two hydroelectric power projects, approved by the Executive Committee of the National Economic Council (Ecnec), the matter of relending and repayment of loans by the Gilgit-Baltistan government also came up for discussion.
One project is of 26 megawatts that will be developed in Shagharthang, Skardu and another is of 4MW to be constructed in Thack, Chilas.
Gilgit-Baltistan is extremely rich in hydro resources, but electricity generation there is well below the potential.
Hydropower projects with foreign financing are a necessity for the region. Meeting participants told the ECC that the Gilgit-Baltistan government was not in a position to repay foreign loans for the two projects and other foreign-funded projects in the future.
Therefore, the government of Pakistan should take on such loans and pave the way for implementation of projects.
They said the region had no financial resources and solely relied on the annual federal grant to finance its development plans and meet non-development expenditures. Gilgit-Baltistan neither has any taxation outlay nor gets any share from the National Finance Commission (NFC) Award.