China approves $5.5b for Pakistan’s main rail link

It is a concessionary loan that will be extended at less than 2%

ISLAMABAD: China has agreed to provide $5.5 billion in a concessionary loan for the expansion and renovation of Pakistan’s main rail link that connects north to south as part of its investment under the China-Pakistan Economic Corridor (CPEC), it was announced on Thursday.

Of the total cost of roughly $8 billion for the ML-I (Peshawar-Karachi) railway project, China has agreed to provide $5.5 billion at an interest rate of less than 2%, said Minister for Planning, Development and Reform Ahsan Iqbal at a press conference after his return from Beijing.



After Beijing’s decision to extend the $5.5-billion loan, the total cost of CPEC projects being funded by China either partially or fully will increase to $50 billion.

Earlier, China had agreed to provide $3.7 billion out of the $46-billion CPEC programme for the ML-I project and “now it has decided to increase its contribution to $5.5 billion”, the minister said.



The Asian Development Bank (ADB) would provide $2.5 billion to cover the remaining cost of the project, he said. The Peshawar-Lahore section of the ML-I will be built with the ADB loan.

The minister said the rail project would be completed in five to six years and after that, the rail speed would double to 180 kilometres per hour. About 75% of the country’s cargo and passenger traffic passes through the Peshawar-Karachi rail track.

At present, the task is to renovate and extend the ML-1. The new railway project from Jacobabad to Gwadar will start in the medium term.

In 2030 and thereafter, a new line from Kashgar to Havelian, special passenger line between Karachi and Peshawar, and the expansion and renovation of existing line between Quetta and Taftan, Peshawar and Landikotal have been planned.



Pakistan is a central part of China’s transition from a regional to global power. In its vast network of ports, pipelines, roads and railways, Pakistan and its strategic deep-sea port of Gwadar serve as a staging post for China’s economic rise as a global player. The port will extend China’s reach from the Indian Ocean to a number of regions.

Security concerns

Iqbal could not give a satisfactory answer when asked about reasons for the delay in calling a meeting of the CPEC Steering Committee, which was necessary to address Chinese concerns over security arrangements for CPEC projects and Chinese nationals. Prime Minister Nawaz Sharif heads the steering committee.

The committee meeting could not be called due to PM’s pressing engagements and his visit to New York, said the planning minister. He did not give a date for the huddle.

Pakistan has not yet deployed a planned Special Security Division due to its jurisdiction issues. According to the planning minister, the interior secretary has assured them that the issues causing delay would be resolved soon.



Responding to a question, Iqbal said the military had not conveyed any reservations about the composition of the steering committee. “All the institutions are on the same page when it comes to implementation of the CPEC,” he remarked.

Planning ministry issues

The Ministry of Planning is being run on an ad hoc basis as all top three administrative positions have been filled by relatively junior bureaucrats. There are also delays in hiring members of the Planning Commission whose contracts have expired months ago.

“Searching good officers has become a gigantic task as the efficiency of bureaucracy has declined to 13% due to General Pervez Musharraf’s policies,” commented the planning minister.

He was responding to a question why grade 19, 20 and 21 officers were serving in the next grade.

“Appointing junior officers on senior posts is a smaller sin,” said the minister while defending the decision.

Published in The Express Tribune, September 30^th, 2016.

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