Pakistan has decided to compensate the 36 Chinese nationals, 10 of whom died in a terrorist attack last year, aimed at removing a major irritant in bilateral relations.

A total 14 people, including 10 Chinese nationals, were killed and another 26 were hurt in a suicide attack on a bus that was carrying them to the work site of the Dasu Hydropower Project in July last year.

The government has worked out four different compensation amounts ranging from $4.6 million (Rs810 million) to $20.3 million (Rs3.6 billion), insiders said on Tuesday.

Pakistan has decided to make payment despite there was no legal or contractual obligation on the government.

The Dasu Hydropower Project is funded by the World Bank and does not fall in the scope of the China Pakistan Economic Corridor (CPEC).

After the government tried to downplay the terrorist attack as an accident caused by gas leakage, China immediately retaliated and cancelled a scheduled meeting of the Joint Cooperation Committee of the CPEC.

The Chinese contractor had also stopped the work on the project and demanded a compensation of $37 million.

The compensation that the contractor had claimed was more than 500 percent what a Chinese national’s heirs would have received if killed in a similar attack in their own country, according to government sources.

The 4,320MW Dasu Hydropower Project is being constructed by China Gezhouba with funding from the World Bank.

The Economic Coordination Committee (ECC) of the cabinet would take up the proposal on Wednesday (today) to formally select one of these four options aimed at removing the bottleneck in bilateral relations.

Prime Minister Imran Khan has directed to present the options before the ECC for making a decision.

Work on CPEC has slowed down considerably over the past three and half years and there is no new project approved by both the sides under the project’s framework.

The $6.8 billion mainline-I project of Pakistan Railways also remains buried in the files.

It is the second time that Pakistan has decided to compensate Chinese nationals, who had died in a terrorist attack.

In 2004, one Chinese national lost his life and another was injured in a terrorist attack while working on the Gomal Zam Dam Project. Pakistan had then paid $100,000 to the family of the deceased and $50,000 to the injured worker.

The first option that the government has used as the baseline is the Gomal Zam Dam amount to work out the current compensation, which comes to $4.6 million (Rs810 million) in today’s exchange rate, said the sources.

On the basis of China’s compensation package for own nationals working in China, the compensation amount would be $6.1 million, the sources added.

However, the Chinese contractor has demanded $37 million compensation.

On the basis of the purchasing power parity based GDP per capita, the compensation amount comes to $11.6 million.

While keeping in mind the factors of Gomal Zam Dam amount of 2004 that is indexed upwards using nominal GDP increase, the compensation will be $20.3 million.

To be headed by Finance Minister Shaukat Tarin, the ECC would pick one of these four options.

After the attack, the Chinese contractor demobilised from the site and had raised several demands as preconditions to resume work.

Then in September last year, an inter-ministerial committee, headed by water resources secretary and comprising the secretaries of finance, law and justice, foreign affairs and interior was formed to work out the compensation amount.

The committee had been tasked to work out the compensation package for the affected Chinese nationals keeping in view the past precedents, the current demand of the Chinese company, the prevalent insurance rates and the package offered by the Chinese government for their nationals in similar cases.

The body had set up a sub-committee, comprising officers of the ministries concerned to work out the necessary details.

The sub-committee had determined that there was no contractual remedy to make financial compensation related to casualties of the contractor’s staff, owing to any terrorist activity.

However, because of China’s sensitivity, Pakistan has decided to make the payment, the sources said.

After the ECC’s approval, the government would take up the matter with China and the money would be handed over to Pakistan’s embassy in China to directly make the payments to the Chinese nationals.

The water resources ministry has sought a supplementary budget to make the payments. There is no provision in the present budget to make them.


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