Pakistan Approves Substantial Cost Increase at Gwadar Airport Funded by China and Built by Chinese Contractors

On October 13, Pakistan’s Central Development Working Party (CDWPapproved a 147% cost increase (to approximately $338.2 million) for the Gwadar International Airport that is already being constructed by Beijing Urban Construction Group and China Railway Beijing Engineering Bureau Group.  The Gwadar International Airport has been touted as a critical component of China’s ongoing development of the Gwadar Port and associated Free Trade Zone, a project that has been widely speculated to be serving both commercial and military interests for China. 

Interestingly, 61% of the expanded cost (approximately $207.6 million) is being funded via a Chinese government grant (rather than financing), which is somewhat out of the ordinary (a white paper by China’s State Council describes grants as typically reserved to support smaller projects related to social welfare).  According to reports, the Chinese funding was originally a loan that was converted in 2015, after which Pakistani authorities stopped the formal bid process for the project.  The grant reportedly ensured that only a company selected by the Chinese government would receive the airport construction project.

The new airport will accommodate larger planes than the region presently permits, opening it up to both domestic and international (mainly Chinese) air traffic, according to those involved.  The airport project was originally granted to China Harbour Engineering Group in 2014 at an estimated cost of $246 million.  The contractor has since been changed, and the project has faced several implementation delays.  As of May 2020, construction of the airport had entered its second phase.