Pakistan asks China to accelerate work on ML-1, KCR

1,872km railway track (ML-1) will cost $10 billion

ISLAMABAD (Web Desk) - Pakistan has requested Chinese government to fast-track the multi-billion dollar Mainline-1 (ML-1) and Karachi Circular Railway (KCR) projects which were agreed between the leadership of the two nations in November.

Ministry of Planning and Development, after a bilateral meeting on China-Pakistan Economic Corridor (CPEC), through a statement, requested strong support of National Development and Reforms Commission (NDRC) and other relevant Chinese government institutions to speed up implementation on important projects like ML-1, KCR and key energy plans.

Chinese government has been asked to accelerate implementation on the first phase of $10 billion ML-1 — the 1,872km railway track along with associated facilities from Karachi to Peshawar — and $2b KCR as agreed between the leadership of the two nations in November.

Two hydropower projects, including 1,124MW Kohala Hydropower Project, had been put on hold for multiple reasons, particularly financial limitations and insurance challenges.

The Chinese political leadership, during PM Shehbaz Sharif’s visit to Beijing on Nov 1, 2022, had given consent to accelerate processing for ML-1 by immediately triggering their respective teams.

Both sides had agreed to arrange bidding for the project by December and negotiations for financing terms and conditions should follow after the selection of the bidder. However, after increase in power sector dues despite creation of a revolving fund to meet at least the requirements of financial institutions, the agreed progress could not be achieved.

After Mr Sharif’s return, Finance Minister Ishaq Dar said KCR was also discussed at those meetings and the project would soon be in the implementation phase. Pakistan’s troubles with IMF, however, followed soon afterwards and payables to Chinese Independent Power Producers went beyond Rs350b.

ML-1 also could not attract financing commitments from the Chinese institutions, leading these delays to get parallel funding offers from the Asian Development Bank that was previously interested in providing loans for the mega project but had been elbowed out on the Chinese insistence.

In January, Planning and Development Secretary Zafar Ali Shah said that a $2.7b loan request had been placed with China for upgradation of the first phase of ML-1 that spread mostly in Sindh and partially in Punjab where the track was damaged by last year’s super floods. The ground level of the track has to be increased with redesigning.

At a subsequent media briefing, Mr Shah said ADB had again offered to finance the ML-1 even though the government was pursuing a part of the project with China. 

Earlier, Planning Minister Ahsan Iqbal confirmed that the country had declined ADB’s offer as China wanted to fund the project single-handedly. “China strongly argued that two-sourced financing would create problems and the project would suffer,” Mr Iqbal had said at a presser in 2017.

Pakistan, during Mr Iqbal’s visit to China last week, again took up the matter with Li Chunlin, Vice Chairman of China’s NDRC. At a follow-up progress review meeting on Monday, the two sides discussed important CPEC projects and minutes of the 11th JCC meeting.