Export-Import Bank of China will provide concessional loan, amounting to Renminbi 1.35 billion Yuan (199 million dollars at current currency exchange rate) to implement new communication satellite, PAKSAT-1R project. Pakistan's Communication Space Craft's life is likely to expire in 2011.
Pakistan and China are expected to sign the framework agreement for the loan. The total cost of the project is 222.310 million dollars with the foreign exchange component (FEC) of 189 million dollars. The SUPARCO and China Great Wall Industry Corporation (CGWIC) signed a commercial contract on October 15, 2008 for the new satellite titled PAKSAT-1R, to be completed in about three years.
According to sources, the Chinese government has agreed that Export-Import Bank of China will first provide an amount of Renminbi 800 million Yuan and the remaining amount would be provided during the project period for continuous financing of the project.
According to the principle terms of the loan, the maturity period of the loan will not exceed 20 years, including five years of grace period. The rate of interest, applicable on the loan, will be two percent per annum. The Chinese government will pay interest subsidies of the loan to the lender directly.
Under framework agreement, the project for utilising the loan will be approved by the governments of Pakistan and China and be evaluated and reviewed by the lender. The governments of Pakistan and China will check the implementation conditions of the loan any time and will negotiate related problems, which may arise during the implementation of the agreement.
The Prime Minister granted anticipatory approval for the project on the proposal of the Strategic Plans Division (SPD) vides Cabinet Division's letter dated May 23, 2008. Accordingly, the SUPARCO and China Great Wall Industry Corporation (CGWIC) signed a Commercial Contract.
The Prime Minister approved the Economic Affairs Division (EAD)'s summary to start negotiations for the PAKSAT-1R loan with the Ministry of Commerce, government of China vide Prime Minister's Secretariat letter dated January 3, 2009. The Executive Committee of National Economic Council (ECNEC) approved the project in its meeting held on March 3, 2009 on a summary submitted by the Planning Commission.