MUSHTAQ GHUMMAN

ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet has sought a comprehensive execution and implementation plan of rail agreements relating to Reko Diq project, along with the details of refinancing, arrangements by March 30, 2026, official sources told Business Recorder.

Sharing the details, sources said, the Ministry of Railways has apprised the ECC that the Reko Diq Project has been declared as a ‘qualified investment’, under the Act of Parliament known as Foreign Investment (Promotion and Protection) Act 2022 and railway track access is crucial for the Reko Diq Project to transport the copper-gold concentrate from the mines in Balochistan for export thus providing a reliable and efficient bulk transport solution for large volumes of material across the 1350 km route. The rail link is necessary for the commercial viability of the project by ensuring that the concentrate can be shipped internationally for further processing and sale.

In January 2023, the Ministry of Energy requested Railways Division to survey potential rail connectivity in coordination with the Reko Diq Mining Company (RDMC). Route surveys were conducted and RDMC expressed preference for a rail link via Port Qasim, connecting ML-III and ML-I. Technical assessments by M/s Vecturis and subsequent deliberations through Joint Working Groups of railways (technical, operational, and legal) have shaped the framework of the Project, addressing train design, track access, responsibilities and operations.

On June 17, 2025, a committee under the chairmanship of the Minister for Economic Affairs, Ahad Khan Cheema recommended a bridge financing arrangement of USD390 million for the Reko Diq Project. This arrangement was approved by the Prime Minister on August 08, 2025.

It was informed that to accommodate the planned movement of Reko Diq Mining Company (RDMC)/ concentrate from the mining site to Karachi Port, the existing Main Line-III (ML-3) railway section from Nokundi to Rohri requires urgent upgradation, as its current condition cannot sustain the projected freight load.

Accordingly, Railways is entering into Rail Development Agreement and Bridge Financing Agreement with Reko Diq Mining Company (RDMC) for the provision of bridge financing amounting to $ 390 million to support the construction and upgradation of Main Line-III (ML-3). The financing is being extended for tenure of three years at an interest rate of SOFR+ 250bps. The Government of Pakistan will act as the guarantor for this facility.

As per the agreed term sheet, the entire principal amount along with accrued interest will be repaid in a bullet payment at the end of the three-year period. It was informed that both the agreements had been vetted by the Ministry of Law and Justice and the improvements made thereof had been incorporated in both the agreements; that as advised by the Ministry of Law and Justice, the comment/NOC from Office of the Attorney General had also been obtained; and that the Ministry of Foreign Affairs had also conveyed its no objection for submitting the summary.

During the ensuing discussion, the Ministry of Railways apprised the forum on the importance of the project. The ECC noted that the project income needs to be securitized as Barrick Group and RDMC are providing bridge financing, and that to refinance the amount bonds will be floated. It was understood that 40% would come from securitization and rest will be provided by the Government of Pakistan and the project duration would be 37 years. The Finance Division pointed out that the Railways Division had not shared the Rail Development Agreement with them. The ECC directed the Railways Division to share the Agreement with the Finance Division and to resubmit the case to ECC if some material change is required.

The ECC also asked the Finance Division to start planning in the fourth quarter of the current financial year to oversee all the modalities involved in this proposal. The ECC also directed that Ministry of Railways and Finance Division shall present to the forum a comprehensive execution and implementation plan, along with the refinancing plan, by the end of March 2026.

After detailed, discussion, the approved the proposal “Rail Agreements Relating to Reko Diq Project” and Ministry of Railways to share the Rail Development Agreement with the Finance Division for review and scrutiny, and to resubmit the case before the ECC if any material changes were required in the Agreement.

The ECC also directed that the Ministry of Railways and Finance Division shall present a comprehensive execution and implementation plan, along with the details of refinancing, arrangements by the end of March 2026 to the ECC for consideration.