Pak approves USD 7.2 bn railway line upgradation project under CPEC

Pakistan has approved the strategic USD 7.2 billion railway line upgradation project between Peshawar and Karachi under the CPEC, paving the way for the final negotiations with China for the finance, a media report said on Sunday.

The approval of the project to upgrade the 1,872 km-long railway track from Peshawar to Karachi is a big milestone for the second phase of the China Pakistan Economic Corridor (CPEC), said Lieutenant General (retired) Asim Saleem Bajwa, chairman of the CPEC Authority.

The Central Development Working Party (CDWP) on Saturday approved the Pakistan Railways’ Mainline-I (ML-1) Project, The Express Tribune reported.

The approval by the key government body has set the stage for the final negotiations with China for financing the project and talks with the International Monetary Fund (IMF) to address its concern over a big loan from Beijing.

Pakistan will also have to seek relaxations from the IMF, as under the existing deal with the global financial body, it does not have space to provide sovereign guarantees to the tune of Rs 1.2 trillion (USD 7.2 billion), the report said.

It was for the fourth time that the project came before the CDWP for approval. The CDWP considered the project for the first time in 2016.

After the approval, the project would go to the Executive Committee of National Economic Council for further approval, the Ministry of Planning said.

It would be finally approved by the Cabinet but the initial approval of the CDWP is considered as a key for any big project.

Once completed, the speed of passenger trains will increase from 65/110 km/h to 160 km/h on the track.

The speed of the freight trains will also increase to 120km/h from 80 kilometer per hour.

The package-1 of the ML-I will be completed between January 2021 to December 2024 and will cover the construction of 527 km-long track between Peshawar, Rawalpindi and Lahore.

Package 2 will be completed from January 2022 to December 2026 and will upgrade 521 km-long track from Lahore to Hyderabad while package 3 will upgrade the 740 km-track of Rawalpindi-Peshawar and Hyderabad-Multan.

Pakistan gives high priority to the ML-1 project due to its strategic importance and the CDWP’s clearance will also pave the way for its inauguration by Chinese President Xi Jinping’s expected visit to the country this year, the report said.

Earlier, the Pakistan Railways proposed the construction of the project at a cost of USD 9.2 billion. However, the transport and communication wing of the planning ministry reduced the cost by USD 2 billion, the report said.

However, the World Bank linked the success of the project to bringing governance reforms in the railways and warned that the project’s debt servicing was not sustainable, the paper added.

The multi-billion dollar CPEC is a planned network of roads, railways and energy projects linking China’s resource-rich Xinjiang Uyghur Autonomous Region with Pakistan’s strategic Gwadar Port on the Arabian Sea.

The project was launched in 2015 when Chinese President Xi visited Pakistan and it now envisages investment of over USD 60 billion in different projects of development in Pakistan.

India has objected to the CPEC as it is being laid through the Pakistan-occupied Kashmir.