In a move to placate its all-weather ally China, Pakistan will pay USD 11.6 million in compensation to 36 Chinese nationals who have died or were injured in a terrorist attack in the restive Khyber Pakhtunkhwa province last year.
The decision on the quantum of compensation to be paid was taken by the Economic Coordination Committee ECC of the Cabinet on Friday, which is chaired by Finance Minister Shaukat Tarin who is isolating after testing positive for Covid 19.
According to a statement from the finance ministry, the proposal of payment of USD 11.6 million was approved by the ECC after deliberation and considering the depth of our relationship with China.
On July 13th, last year, 10 Chinese nationals, mostly engineers, were killed and 26 others seriously injured after a suicide attack on a bus carrying them to the work site of the Dasu Hydropower Project in the Kohistan district of Khyber Pakhtunkhwa province.
The 4,320 MW Dasu Hydropower Project is being built by China Gezhouba company with funding from the World Bank and is not part of the China-Pakistan Economic Corridor CPEC, a multi-billion dollar scheme launched in 2015.
After Pakistan announced earlier this week that it would compensate the victims, the Chinese company had suspended its activities on the site until the issue of compensation was resolved and resumed work on Thursday.
Cash-strapped Pakistan agreed to compensate the Chinese nationals despite being not legally bound to pay anything to the killed or wounded in the attack. The amount is double that of what China normally pays its citizens dying in similar attacks in China.
The Pakistani media commented earlier this week that the compensation payment is intended to remove a major irritant in Pakistan-China bilateral relations.
Four Pakistani nationals were killed in the terrorist attack and it was not clear if their families would also be compensated.
After the attack, ties between the iron brothers and a key meeting on the China-Pakistan Economic Corridor CPEC were postponed. The Chinese contractor stopped the work on the project and demanded compensation of USD 37 million.
According to a report in The Express Tribune on Tuesday, Pakistan worked out four different compensation amounts ranging from USD 4.6 million to USD 20.3 million despite there being no legal or contractual obligation on the government.
Pakistan, while paying compensation, took into account the amount paid to Chinese workers in 2004. The old amount was inflated by using purchasing power parity based on GDP per capita.
The Pakistan government had tried to downplay the terror attack by referring to the incident as gas leakage.
Later, Islamabad acknowledged that it was a terrorist attack. China sent a group of experts to investigate the attack.