Under CPEC: Upgrading of rail link from Peshawar to Karachi to begin in New Year
NAVEED BUTT
ISLAMABAD: The up-gradation of Pakistan’s main rail link from Peshawar to Karachi, ML-1 project, will start from next year (2017) with $ 5.5 billion financing from the Chinese EXIM Bank and $ 2.5 billion loan from the Asian Development Bank (ADB) under the China-Pakistan Economic Corridor (CPEC).
According to sources, for financial arrangement of the project, the two governments have already reached a broad understanding and have defined principles for financing the transport infrastructure projects during the first Planning Working Group meeting. The ML-1 project offers social benefits and is not suitable for the enterprise investment; therefore, the project falls under the category of concessional financing. They said that the concessional loan will be provided at less than 2 percent markup, but final negotiation on modalities of concessional loans will be carried out by the Economic Affairs Division (EAD).
The sources said the ministry of railways is actively engaged with the international financing institutions, mainly the ADB, to co-finance the ML-1 project. The ADB has shown keen interest to provide $ 2.5 billion loan for Peshawar to Lahore section of ML-1 project.
The sources said that both sides are working very closely and most of the issues regarding project implementation have already been sorted out. They said that in line with the framework agreement signed between the Ministry of Railways and China’s National Railway Administration, the joint feasibility has been cleared by the Central Development Working Party (CDWP) in June 2016.
They said that preliminary engineering design of the ML-1 project has been initiated and is scheduled to be completed by the end of December, 2016 for priority sub-projects under phase-1. They said that for phase-11, sub-projects and the preliminary design will be completed by June 2017.
The sources maintained that the federal government would only provide guarantees for the $8 billion loans that Pakistan will avail from China and the ADB to complete the project.
