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.