Pakistan seeks USD 7 billion loan from ADB for railway line project: Report

Islamabad, Aug 28 (PTI) Pakistan approached the Asian Development Bank (ADB) for a USD 7 billion loan to upgrade a major railway line after China apparently declined to support the project, a report said on Thursday.  The development of Mainline-I (ML-I) railways between Peshawar and Karachi is stuck due to a lack of funds, the Express Tribune reported.

Pakistan was waiting for China to fulfil its 85 per cent financing commitment for the project, but finally turned to the ADB, the report added.  Pakistan requested the bank to fully finance the ML-I project in consortium with other multilateral lenders. Still, the ADB, along with the Asian Infrastructure Investment Bank (AIIB), was ready to provide about 60 per cent funding for the Karachi-Rohri section, the report quoted the sources as saying.

  The Manila-based lender may take a section-wise approach to finance the project due to its size.  Pakistan raised the issue of complete financing from the ADB, AIIB, and other multilateral agencies during Prime Minister Shehbaz Sharif and Finance Minister Muhammad Aurangzeb's meeting with ADB President Masato Kanda on Wednesday in Islamabad, the report said.

The ADB demanded detailed design documents of the Karachi-Rohri section to assess actual funding needs. It may partner with the AIIB to provide 60% of the funding, around USD 1.2 billion, for this section, they added.

The Planning Commission is expected to receive revised project costs this week to determine the true cost.

The ADB assured a USD 10 million Project Readiness Facility by November to validate the earlier Chinese feasibility study of ML-I, vet the project's detailed design, and review the Rohri-Multan section.

Based on its findings, the ADB is expected to approve multi-tranche loan facilities with AIIB and the European Investment Bank, sources added.

As per government estimates, the Karachi-Rohri section needs USD 2 billion and the Rohri-Multan section USD 1.6 billion, bringing just these two to USD 3.6 billion.  However, it is expected that due to international competitive bidding, the total cost will still be less than the projected cost under the bilateral framework.

The prime minister was keen to hold the groundbreaking ceremony of the ADB-funded ML-I in June next year, but the railways ministry and ADB gave December as the timeframe, said the sources.

The ADB president linked funding to the outcomes of the Project Readiness Facility report.

China had earlier asked Pakistan to reduce the ML-I cost from nearly USD 10 billion to USD 6.7 billion to make it financially viable. It was the only declared "strategically important" project under the China-Pakistan Economic Corridor (CPEC), and Islamabad demanded a concessional loan, the report said.  The project is already seven years late due to Pakistan's high indebtedness. Pakistan had sought a loan equal to 85 per cent of the cost from China, but Beijing refused concessional terms.

The early completion of the Karachi-Rohri section is critical for transporting copper and gold from the Reko Diq mines, the report quoted sources as saying.  The Reko Diq Mining Company plans to begin production by 2028, requiring a railway network for smooth and timely transportation, the report added. PTI SH RD RD RD