New Delhi: In a move aimed at placating its all-weather ally China, Pakistan in a "goodwill gesture" will pay USD 11.6 million in compensation to the 36 Chinese nationals working on a major hydropower project who either 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 on Friday by the Economic Coordination Committee (ECC) of the Cabinet, remotely chaired by Finance Minister Shaukat Tarin who is isolating after testing positive for Covid-19.

The ECC, after deliberation and considering the depth of our relationship with China, approved the proposal of payment of USD 11.6 million as a goodwill gesture on (the) government level, according to a statement by the finance ministry.

On July 13 last year, 10 Chinese nationals, mostly engineers, were killed and 26 others were seriously injured after a suicide attack on a bus that was ferrying them to the work site of the Dasu Hydropower Project in Kohistan district of Khyber Pakhtunkhwa province.

The 4,320-MW Dasu Hydropower Project is being constructed by China Gezhouba company with funding by the World Bank and is not part of the China-Pakistan Economic Corridor (CPEC), a multi-billion-dollar scheme launched in 2015.

The Chinese company had suspended their activities on the site until the issue of the compensation was resolved and it resumed work on Thursday after Pakistan earlier this week announced to compensate the victims.

Cash-strapped Pakistan agreed to compensate the Chinese nationals despite it being not legally bound to pay anything to the killed or wounded in the attack. Also, the amount is double than what China normally pays its citizens dying in similar attacks in China.

The compensation payment is apparently aimed at removing a major irritant in Pakistan-China bilateral relations, the Pakistani media commented earlier this week.

Four Pakistani nationals were also killed in the terrorist attack and it was not clear if their families would also be compensated.

The attack soured ties between the iron brothers and a key meeting on the China-Pakistan Economic Corridor (CPEC) was postponed after the attack. The Chinese contractor also stopped the work on the project and demanded a compensation of USD 37 million.

According to a report in The Express Tribune newspaper 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 the compensation, took into consideration the amount paid to Chinese workers in 2004. But the old amount was inflated by using purchasing power parity based GDP per capita.

The Pakistan government had initially tried to downplay the terror attack, by terming the incident as gas leakage.

But later Islamabad acknowledged that it was a terrorist attack. China had also sent a group of experts to probe the attack.