China to provide 90% funding for $6.8 bln Pakistani railway project 鈥� minister

Policemen walk along trains stationed on a deserted platform at Karachi Cantonment railway station in Karachi on March 26, 2020. Under the $6.8 billion Mainline-1 (ML-1) project, Pakistan鈥檚 2,655 km railway tracks will be upgraded to allow trains to move up to 165 km per hour, while the line capacity will increase from 34 to over 150 trains each way per day. (AFP/File)
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  • Construction of Mainline-1 (ML-1) project will start by year end, Shaikh Rashid Ahmed says聽
  • At $6.8 billion, the ML-1 project is almost equal to Pakistan鈥檚 entire development budget for this fiscal year

KARACHI: Federal Minister for Railways Shaikh Rashid Ahmed said on Tuesday China would provide 90 percent financing for a $6.8 billion initiative to upgrade the 1,872 kilometers Mainline-1 (ML-1) railway project, the country鈥檚 costliest project to date as part of the multibillion-dollar China-Pakistan Economic Corridor (CPEC) agreement.

CPEC has seen Beijing pledge over $60 billion for infrastructure projects in Pakistan, central to China鈥檚 wider Belt and Road Initiative (BRI) to develop land and sea trade routes in Asia and beyond.

鈥淎bout 90 percent of financing for the project will be provided by the Chinese government [through the government concessional loan] while the remaining amount will be shared by us,鈥� the railways minister told Arab News in an interview. 

鈥淭he process of tendering will start in the first week of September and take about two months to complete. We will most probably start implementing the project by the end of the year,鈥� he said, adding that the project was scheduled to be completed in five years. 

Under the project, Pakistan鈥檚 existing 2,655km railway tracks would be upgraded to allow trains to move up to 165km per hour 鈥� twice as fast as they currently do 鈥� while the line capacity would increase from 34 to over 150 trains each way per day.

鈥淲hen the ML-1 Project is completed, the speed of trains will more than double the current 65-110 kilometers per hour to 165 kilometers per hour,鈥� Ahmed said. 鈥淥ur cargo trains will also operate at a speed of 120 kilometers per hour.鈥�
鈥淲e will also eliminate all crossings,鈥� he added. 鈥淭he new fully automatic [computer-based signaling and control] system will be installed, and underpasses and overhead bridges will be constructed.鈥� 
Ahmed said the project would provide job opportunities to more than 150,000 people, of whom 90 percent would be Pakistanis and 10 percent would be Chinese nationals. 
鈥淎fter the successful completion of ML-1, we will also focus on ML-2 and ML-3,鈥� he said. 
The move ahead on ML-1, which has been on hold for years, will dispel notions that the government of Prime Minister Imran Khan is seeking to roll back some of the mega Chinese-funded projects that he himself had questioned when in opposition.
The ML-1 Project will be executed in three phases to avoid commitment charges, the minister said. The loan amount for each package would also be separately contracted to double the tracks from Karachi to Peshawar via Hyderabad, Nawabshah, Rohri, Rahimyar Khan, Bahawalpur, Khanewal, Sahiwal, Lahore, Gujrawala and Rawalpindi. 
At $6.8 billion, the ML-1 project is almost equal to Pakistan鈥檚 entire development budget for fiscal 2020/21, which stands at 1.32 trillion Pakistani rupees.
鈥淥ne can only comment on the financing strategy [of the railway project] after more details become public. However, if its rate is within the same range offered by the World Bank to its affiliated institutions, then it is fine,鈥� Dr. Ikram ul Haq, a Lahore-based financial analyst, told Arab News. 鈥淏ut if it is higher then comparative bidding should have been the best way.鈥�