Finance

Pakistan seeks more Chinese finance for Mainline-1 project

Cost of Karachi – Peshawar upgrade now $US 6.8bn.

The ML-1 project forms part of China’s Belt and Road Initiative.

PAKISTAN’s planning minister, Mr Ahsan Iqbal, has made a renewed request for finance from China to undertake the $US 6.8bn Mainline-1 (ML-1) project.

The request was made in a meeting with the Chinese chargé d’affaires to Pakistan, Miss Pang Chunxue, who assured Iqbal that her government would consider the proposal, according to the Express Tribune newspaper.

The ML-1 project involves track doubling and upgrades on 1872km of railway split into three sections: the 527km northern section between Peshawar, Rawalpindi and Lahore; 521km of track between Lahore and Hyderabad; and 740km of track upgrades along the Rawalpindi – Peshawar and Hyderabad – Multan lines. Work will also include improvements to signalling and control systems. The project is part of the China – Pakistan Economic Corridor (CPEC), a subsection of the Belt and Road Initiative.

ML-1 was initially costed at $US 9bn and later revised downwards to $US 6.8bn. However, the Chinese government expressed its concerns over Pakistan’s ability to repay the debt of $US 6bn it would incur for the project.

Pakistan’s public finances are in a poor condition, with government debt standing at 87.2% of GDP at the end of the last financial year and 60% of tax revenue being used for debt servicing.

The Chinese government has also highlighted the poor financial condition of Pakistan Railways that would not allow the state operator to take on $US 6bn of debt, according to the Express Tribune.

Negotiations over Chinese loan finance have been continuing for over two years, meaning that the ML-1 project is now more than four years behind its original schedule.

“My top priority is to expedite the CPEC projects to restore the confidence of the Chinese investors,” Iqbal says.

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