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

Published: September 30, 2016
The rail project would be completed in five to six years and after that, the rail speed would double to 180 kilometres per hour. PHOTO: FILE

The rail project would be completed in five to six years and after that, the rail speed would double to 180 kilometres per hour. PHOTO: FILE

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.

Japan still ready to fund Karachi Circular Railway

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.

$8.2b railtrack upgrade project wins go-ahead

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.

Pakistan Railways suffers another loss-making year

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 30th, 2016.

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Reader Comments (14)

  • Fast
    Sep 30, 2016 - 7:27AM

    It’s an eye opener for those chanting the high interest rates on loans under CPEC. Out of around $50bn, 35bn is investment in energy projects while $15bn is loan having interest rate of just 2%. A win win for both the countries.Recommend

  • Humza
    Sep 30, 2016 - 9:27AM

    Anyone can say what they want, but it is clear that the current government has ambitious plans to revolutionize the country. This is what scares Imran Khan the most because he will have no chance if Nawaz completes all the projects he has started by 2018.Recommend

  • rahul
    Sep 30, 2016 - 9:27AM

    Japan Provided Credit of 80000 crore Indian rupees/125645.70 Pakistani rupee at an interest rate of 0.1 % for a period of 50 years for its bullet train project.Recommend

  • Hamza
    Sep 30, 2016 - 9:30AM

    Need of the hour! We must focus on our infrastructure while india focuses on bollywood driven storyRecommend

  • imran
    Sep 30, 2016 - 10:08AM

    Concentrate on CPEC and InshaAllah we will hire Indians to work for us , the way they are working in U.A.E.Recommend

  • Tyggar
    Sep 30, 2016 - 10:19AM

    Japan is funding India’s bullet train at 0.5% interest for 50 yearsRecommend

  • Santosh
    Sep 30, 2016 - 10:45AM

    Dear friends, could you please Google the net worth of Ratan Tata, Indian industrialist.Recommend

  • Lolz
    Sep 30, 2016 - 10:50AM

    @Humza: Darbari!Recommend

  • Tyggar
    Sep 30, 2016 - 11:12AM

    But then the world economic forum said Pakistan’s infrastructure is deteriorating while every other country’s improves. Recommend

  • Shaukat
    Sep 30, 2016 - 12:07PM

    Approval of loan is very easy. The difficult thing is the repayment, the burden of which will fall on the Pakistani citizens.Recommend

  • Sam
    Sep 30, 2016 - 2:26PM

    What a joke, for this amount other countries install railway lines which can cater to speed of 220-260 kms an hour – and this is not even considered a High Speed Rail!!! PML – N has one purpose to show to public that they are doing projects. Expensive, usefullness DOENST matter. Just want to show launching and working on projects for winning election Recommend

  • harkol
    Sep 30, 2016 - 3:54PM

    2% is good, but this is indexed in US$, which keeps becoming ezpensive as a countries currwncy goes down..

    One thing is sure. CPEC will be good for Pakistan, if only it is done on territoty it doesnt own.UN rwsolution that pakistan harps about has asked Pakistan to vacate GB and other portions of Kashmir under its contrl, thus Pakistan is inillegal possession of Kashmir.Recommend

  • Oommen
    Sep 30, 2016 - 5:32PM

    are Pakistanis incapable of building airports, seaports, railways, power stations & roads ?
    it would have been much cheaper if local cos do it with cheaper loans.Recommend

  • who me?
    Sep 30, 2016 - 9:02PM

    Rubbish. Who thinks China is going to lend money to Pakistan at rates lower than China can borrow? Anyone recall all the CPEC articles yrs ago when they implied that CPEC wasn’t going to involve loans … then they migrated to “low cost” loans … then the project suddenly became “mysterious” and nobody has a clue what the real cost is or how they will be repaid. This is just more of the same.Recommend

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