Govt slashes investment in CPEC rail project by $2b

Published: October 1, 2018
Email
File photo of Karachi Circular Railways. PHOTO: REUTERS

File photo of Karachi Circular Railways. PHOTO: REUTERS

File photo of Karachi Circular Railways. PHOTO: REUTERS Railways Minister Sheikh Rashid addressing a news conference in Lahore on Monday. PHOTO: NNI

Citing debt concerns, Railways Minister Sheikh Rasheed has announced to bring down the China-Pakistan Economic Corridor (CPEC) investments in Pakistan Railways to $6.2 billion, a move that could halt many projects related to upgrade of the organisation.

The announcement gives credence to the reports that the Pakistan Tehreek-e-Insaf (PTI) led government intends to scrutinise $62 billion infrastructure and power projects, which the last Pakistan Muslim League-Nawaz (PML-N) government initiated under CPEC.

CPEC’s investment share for Pakistan Railways was $8.2 billion, which was to be utilised for upgrading Main Line-1 (ML-1) a colonial-era line stretching 1,872 km from Karachi to Peshawar.

The previous railway minister Saad Rafique had called upgrading of ML-1 as vital for railways future as it would bring as many as 171 trains on track per day against the current number of 32 trains.

The current railways minister, however, said that CPEC’s share has already been reduced to $6.2 billion.

Sound rail network imperative for national development: Sheikh Rasheed

“Pakistan is a poor country that cannot afford huge burden of the loans,” Rasheed told a news conference in Lahore. “Therefore, we have reduced the loan from China under CPEC for rail projects from $8.2 billion to $6.2 billion. CPEC is like the backbone for Pakistan, but our eyes and ears are open,” he added.

Rasheed said the government remains committed to the Karachi-Peshawar Main Line-1 (ML-1) project but added that he wishes to further reduce the cost to $4.2 billion from $6.2 billion.

He said he is the biggest supporter of the CPEC, but also wants minimum debt burden on railways as the nation has to pay back all the investments. He, however, was unable to explain, which projects the management has skipped to bring down the investment.

The changes are part of Islamabad’s efforts to rethink key Belt and Road Initiative (BRI) projects in Pakistan, where Beijing has pledged about $62 billion in financing but the new PTI government is more cautious about the Chinese investment.

IMF request for CPEC contract details declined

The new government has pushed for deeply concessional loans for the ML-1. It has also invited third countries to join or for the Chinese to be investors in the project through the build-operate-transfer (BOT) model that would rely less on debt.

The United States has criticised BRI projects, warning that the loans could turn into debt traps for poor countries unable to pay them money back. Beijing denies the claims, saying the loans are a win-win situation for both countries.

Standard gauge track

Rasheed further announced that he is going to start a standard gauge track in between Karachi and Peshawar junctions. The existing track is a broad-gauge track and is due to be rehabilitated and upgraded under the CPEC.

The minister did not elaborate whether it will be a new track and whether it would come under the CPEC investments. “In the first hundred days in office, I will initiate 10 new passenger trains, and will bring up cargo train number from 10 to 12 trains daily,” he said.

Austerity axe falls on CPEC, Gwadar projects

He said he wished to further expand the passenger base for Pakistan railways to over 70 million. The passenger traffic currently stands at around 55 million annually. “If needed, I will bring down the cost of a ticket to Rs100 to facilitate the passenger,” he claims.

Talking about fresh recruitment in railways, Rasheed said he had got an approval to recruit 20,031 new employees. “We need another 8,000 new workforce if we have to meet certain requirements of the different departments”.

Referring to the pending cases in courts, he said he will hold those defaulters accountable, who are not giving billions of rupees to Pakistan Railways,

He said the entity needs private investors and private sector especially to bring railways marketing section up to the mark. “We need trained marketing people, who unfortunately are missing in the organisation right now,” he said.

He said the railway is also planning to utilise its spaces for industrial purposes. “We are planning to offer space for industrial zones along all the major railway station,” he added.

With additional input from Reuters

Facebook Conversations

Reader Comments (2)

  • israr khan
    Oct 2, 2018 - 12:12AM

    what does railways do best? they move ppl and goods from one place to another place, that is what u should do, use the land for that, improve the quality of track, help linking Pakistan not just via train, you can use the areas around rail track which is also owned by rail for electricity transmission, safe transmission, use the tracks to move more and more goods … cpec should be via train almost 80% Recommend

  • Lalit
    Oct 2, 2018 - 9:24AM

    In Pakistan ,words investment and debt are interchangeable.Recommend

More in Business