Pakistan’s Mainline-I Railway Project: A New Path Forward
In a significant move, Pakistan is reaching out to the Asian Development Bank (ADB) for full financing of the nearly $7 billion Mainline-I (ML-I) railway project. After nearly a decade of waiting for Chinese funding, the Pakistani government is now turning to multilateral lenders to secure the financial backing it needs to move forward.
Why the urgency? The Karachi-Rohri section of this railway is crucial for transporting precious metals like copper and gold from the Reko Diq mines, where production is slated to begin in 2028. The ADB has shown its willingness to fund around 60% of this section, alongside potential support from the Asian Infrastructure Investment Bank (AIIB).
However, it’s not all smooth sailing. The ADB has requested detailed design documents to gauge the actual funding requirements, and the project’s size may lead to a section-wise funding approach. This means Pakistan must be strategic about how it seeks financial support moving forward.
Funding efforts are underway, but there’s a catch: Pakistan needs to arrange significant rupee cover from the finance ministry to proceed. This becomes even more challenging given the limited size of the public sector development programme. The Karachi-Rohri section alone requires over Rs600 billion over the next three years.
The complexities don’t end there. China initially committed 85% financing for ML-I but pulled back, insisting on cost reductions that aligned with Beijing’s priorities. Now, Pakistan’s government pushes for a comprehensive funding package from ADB and other agencies, recognizing the importance of ML-I not only for economic growth but for the nation’s transportation infrastructure.
Notably, ADB President Masato Kanda was recently in Pakistan to discuss these proposals and reaffirm ADB’s commitment to supporting the country in various sectors, including energy transition and climate resilience. This partnership is crucial as Pakistan seeks to stabilize its economy following significant reforms.
With plans for a groundbreaking ceremony for the ADB-funded ML-I project as early as June next year, all eyes are on Pakistan’s ability to navigate the complex landscape of international financing. Through collaboration and strategic planning, the country hopes to see the project through to fruition.
For those interested in staying connected with updates on economic and infrastructure developments in Pakistan, consider exploring resources like Pro21st. Engaging with platforms that offer insight into these crucial topics can enhance your understanding of the evolving landscape in Pakistan and beyond.
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