The Executive Committee of the National Economic Council (Ecnec) has approved the $6.8 billion Mainline-1 railway project, which allows the government to move ahead with its fundraising. The project, which is part of CPEC, is expected to be about 90 per cent foreign-financed through loans from China. Engineering, procurement, and construction will go to Chinese contractors, for which a request for exemption from international competitive bidding will be sent to the Economic Coordination Committee of the Cabinet. The rail project is notable as it is the only strategic project being finalised as part of the initial $46 billion in CPEC deals.
Despite the contracts essentially being no-bid, Pakistan expects fair prices, because the estimates have all been vetted by third parties. There was apparently some haggling involved because of the separate negotiations with the IMF, which has its own concerns about debt sustainability. It appears Pakistan has addressed these concerns by drawing up an elaborate phased construction plan. In the first of three phases, Pakistan will commit to around $2.4 billion worth of construction work to stay compliant with an IMF commitment that created a spending limit of $2.5 billion during the same period. The second phase will start a year after phase one and will cost $2.7 billion as the IMF spending ceiling will not apply. The final phase will begin two years after “package one” and will cost $1.7 billion.
Even though the Ecnec meeting lasted for just 30 minutes, at least one spanner was thrown in the works, namely a proposal by Railways Minister Sheikh Rashid to move the $856 million Lalamusa-Rawalpindi section from phase three to phase one. Rashid just happens to be an MNA from Rawalpindi. Fortunately, reports suggest Planning Minister Asad Umar shot down the proposal, noting that the packages had been finalised in consultation with all stakeholders, including Rashid’s ministry. While some minor hurdles still remain, we hope that work on the cross-country rail project can begin soon. Higher speed trains will be a boon to trade and public transport, and an upgrade that Pakistan’s archaic rail system has needed for decades.
Published in The Express Tribune, August 8th, 2020.
Like Opinion & Editorial on Facebook, follow @ETOpEd on Twitter to receive all updates on all our daily pieces.
COMMENTS
Comments are moderated and generally will be posted if they are on-topic and not abusive.
For more information, please see our Comments FAQ