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China Pakistan Economic Corridor (CPEC) | Railway

ghazi52

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Pakistan, China move forward with ML-1 financing, construction plans

July 28, 2021


Pakistan has asked China for granting loans for the construction of Mainline-1 (ML-1), a CPEC railway project from Karachi to Peshawar. Moreover, China has also offered a combination of favourable terms and conditions for the construction of ML-1, as the project is to be financed solely from China on concessional terms. The Executive Committee of the National Economic Council (ECNEC) had approved ML-1 at an estimated cost of $6.8 billion on the 90:10 percent cost sharing basis by the China and Pakistani side. The Pakistan and China have agreed for the tenure of the loan to be 25 years, whereas Pakistan has agreed to repay the principal and interest in half a year’s time.

ISLAMABAD: Pakistan has formally asked China for providing loans for construction of the much-awaited Mainline-1 (ML-1) of rail line from Karachi to Peshawar in USD instead of Chinese RMB currency or a combination of both currencies could be acceptable for moving forward.

Top official sources confirmed to The News here on Tuesday that Pakistani authorities have communicated five major points to Beijing officially for evolving consensus on financing agreement for the construction of multi-billion dollar strategically important ML-1 project under China Pakistan Economic Corridor (CPEC).

The Joint Coordination Committee (JCC) was postponed recently between the two sides and it was not yet known when the JCC was going to be rescheduled. However, Pakistan officially conveyed its response to Chinese for finalizing the financing agreement on the ML-1 project.

The Chinese side want to provide a loan for ML-1 in RMB currency but Islamabad conveyed that Pakistan prefers the loan in US dollars or a combination of US dollars and RMB currencies for the convenience of Chinese side.

China has also offered Pakistan a combination of favorable terms and conditions and commercial loans for construction of ML-1 but Pakistani side is insisting upon extending lenient conditions only. The Pakistani side communicated to China that the Framework Agreement for ML-1 stipulates that Beijing will provide financing for the project on softer terms, being a strategic project.

Consistent with this stipulation and the fact that CPEC related projects were provided concessional financing terms, the project is proposed to be financed by Chinese side on concessional terms. Pakistan will accept favorable financing terms which as compared to previous CPEC Infrastructure projects.

There are differences over share of loan from Chinese side for construction of the project as Pakistan had initially proposed 90 percent share of loan from China and 10 percent from Pakistani side. However, Chinese side proposed that its share should be 85 percent and Pakistan should provide the remaining 15 percent resources for construction of the ML-1 project. After hectic negotiations, Pakistani side agreed to the Chinese proposal of its 85 percent loan of the cost of ML-1.

The Chinese team also proposed 15 to 20 years tenure of the project, however, Pakistan argued that the construction of ML-1 might hover around for 10 years and the payback of loan period take another 15 years, so Islamabad proposed a 25 year tenure of the loan including a 10 years grace period. China has asked for repayment of principal and interest in half a year and Pakistani side agreed to it and also accepted that the government would extend the guarantee to the Chinese loan amount.

The Executive Committee of the National Economic Council (ECNEC) had approved ML-1 at an estimated cost of $6.8 billion on the 90:10 percent cost sharing basis by the China and Pakistani side. The ECNEC had basically three different component of ML-1 project including package-I of ML-I at the cost of US$ 2.7 billion which include Nawabshah-Rohri Section (183 Km), Multan-Lahore Section (339 Km), Lahore-Lalamusa Section (132 Km), Kaluwal-Pindora Section (52 Km) and upgradation of Walton Railway Academy at Lahore.

Under Package-II, the cost of $2.67 billion was approved for up-gradation of Kiamari-Hyderabad Section (182 Km) and Hyderabad-Multan Section (566 Km) excluding work done on Nawabshah-Rohri Section in Package-I. Under Package-III, the ECNEC approved a cost of $1.42 billion for construction of Lalamusa-Rawalpindi Section (105 Km), Rawalpindi – Peshawar Section (174 Km) and establishment of dry port near Havelian.
 

Ghessan

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Pakistan, China move forward with ML-1 financing, construction plans
this need to be executed as early as possible. the delays are hampering a project that is the backbone of communication and transportation, a hurdle in the development of regions within Pakistan and the connectivity that is very important with the regional countries increasing volume of trade to massive level.
 

ghazi52

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CPEC Parliamentary Committee for early execution of ML-1 project

August 26, 2021





LAHORE, Aug 25 (Gwadar Pro) – A Pakistani parliamentary committee on Tuesday afternoon directed to complete the China-Pakistan Economic Corridor (CPEC)’s Main Line-1 (ML-1) railway project at the earliest as Chinese loan had already been approved.

The meeting of the National Assembly’s Standing Committee on Railways was held under the chairmanship of Mueen Watto, in committee Room Pakistan Railways Headquarters, Lahore to discuss the agenda items.
“The committee discussed the present status of ML-I project which is pending for long but the committee has always been briefed by the railways that the project will be started soon in every briefing,” said an official statement issued after the meeting.

It added: “Lastly, Ministry of Railways briefed the committee that Chinese loan has been approved but despite that there is no ground progress. The committee recommended that the said project may be launched at the earliest for its timely completion.”

The National Assembly’s Standing Committee on Railways showed its reservation on the poor implementation of the previous recommendations made in a different meeting including the ML-1.

Further, the committee also reiterated the issue of regularization of staff, clearance of retiring benefits and dues of railways employees. The committee discussed the report of the Sub-Committee and approved its recommendations.

Members of the National Assembly Sheikh Rashid Shafique, Amjad Ali Khan, Tahir Iqbal, Engineer Sabir Hussain Kaim Khani, Chaudhry Muhammad Hamid Hameed, Ali Pervaiz, Muhammad Khan Daha, Nauman Islam Shaikh, Ramesh Lal, Muhammad Bashir Khan, Pir Syed Fazal Ali Shah Gillani, Dr. Muhammad Afzal Khan Dhandla and Nusrat Wahid attended the meeting.
 

FuturePAF

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When they rebuild mainline 1; the tracks should be built to prioritize freight; ability to carry double stack containers, so the tracks and the rolling sticks need to be be able to carry heavy weights per axle, which would mean the trains may not be the fastest, but they will be the most efficient for freight, etc.

prioritizing it for passenger speeds as in Europe will not make them as profitable as prioritizing them for freight as with US rail companies. Pakistan should be studying US freight tracks and what India is build on their side; the Dedicated freight corridors. This is about geo-economics, and making a railroad that will earn as much of a profits as fast as possible, so it can help fund other needed national development projects like the DAMs.
 
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FuturePAF

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This is how Mainline 1 should be built, to prioritize heavy freight and (not passengers), especially food. Once the entire line is completed, so that it can start generating revenue, the profits should be reinvested to complete a link along the Karakoram Highway to link up with China, and onwards to Russia. Afghanistan is too volatile to invest in, and we can’t wait on them to get their act together. By the time they are ready (for mineral transportation), we should have infrastructure ready to go on our side of the border; both to Karachi and north into China.

This is a design that works for Panama and may work for us as well, especially for Chinese and Russian companies looking to have backup routes from east Africa, just in case their shipping routes become challenged. The Chinese rail link through Kazakhstan to Russia is complete, so we just need our part to build an efficient rail system between Europe and South Asia (on to East Africa) and make good on the geoeconomics we keep planning for.

 
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ghazi52

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CPEC’s ML-I is a strategic project of BRI

November 30, 2021



Upgradation of the Pakistan Railway’s Mainline-I, which runs north to south connecting the country, is envisaged under the multibillion dollar China-Pakistan Economic Corridor (CPEC) – a flagship project of the Belt and Road Initiative (BRI). The goal is to revamp and modernize the dilapidated railway infrastructure of Pakistan.

The project has great strategic importance for Pakistan and China, as it would revive the backbone of the railway network. The project was declared a “strategic project” by the Joint Cooperation Committee (JCC) of CPEC in 2017. It, thus, reflects a high-level consensus between leadership and policymakers of both countries.

Significance of the ML-I project can be gauged from the fact that Pakistan’s present railway track and allied infrastructure were initiated during the 19th century under the British Raj. In 1947, at the time of independence, Pakistan inherited the same infrastructure and continued to run it. Now population dynamics have changed and along with it the infrastructure has degraded as it is a 150 year old system.

A modern railway network is a strategic requirement of Pakistan’s economy and supply chain systems. It will improve logistics transportation systems, save transportation time, promote connectivity and improve the quality of travel across the country.

The goal of connectivity through CPEC is unachievable without upgrading the ML-1 of Pakistan railways. The upgradation and expansion of ML-1 is, thus, considered as a big milestone in the improvement and modernization of Pakistan railways.

ML-I spans nearly 1,872 kilometers.
The estimated cost of expansion and reconstruction of the ML-1 projects is $6.8 billion.

In 2015, technical experts from both China and Pakistan undertook a joint feasibility study. It was carried out by China Railway Eryuan Engineering Group Corporation, Ltd, NESPAK and PRACS. The report from the feasibility study was deliberated at the JCC in 2017, and at that time, the committee approved the study and gave a go-ahead for the next stage of the project i.e., realizing financial close and finalizing the design and other technical details.

Under the proposed framework, the ML-I project consists of three packages: first, to upgrade the track between Lala Musa to Lahore, Lahore to Multan, and Nawab Shah to Rohri. The second package will focus on modernization of the track between Lala Musa and Rawalpindi, Nowshera-Peshawar and Hyderabad Karachi section. The third package will focus on upgradation of Multan Khanewal to Sukkur section.

After the upgradation and completion of the project, the entire track will be a modern dual track.


. The speed of passenger trains will increase from existing 65-110 kilometers per hour to 160 kilometers per hour, while freight trains will be able to run at the speed of 120 kilometer per hour. Moreover, Pakistan railways will have a computer based signaling and control system, reducing inefficiencies and accidents, while grade separation will be implemented to ensure the safety of train operations.

It was in 2017 that JCC agreed to undertake the project and the framework agreement was signed in May, 2017 during the visit to Beijing of then Prime Minister Nawab Sharif. Since then, both sides have remained engaged in talks for financial closure, with work not yet commenced. For three years, both sides have negotiated on the estimated cost of the project and mode of financing.

Earlier, it was suggested that the project would cost more than $8 billion. This was an expensive undertaking for Pakistan, as the federal government had initially approved the project cost of $7.2 billion over eight years. Pakistan sought to reduce the cost. In 2020, both sides agreed to a reduce projected cost of $6.8 billion and the Executive Committee of the National Economic Council approved the project in August 2020.

Next, talks commenced for exploring financing arrangements for the project. Pakistan sought government concessional loan from China on low-interest rates in the USD denomination, as it considers ML-I a strategic project for both sides. China proposed a combination of commercial and concessional loans, with mix of RMB and USD components. The interest rates in Pakistan’s proposed financing facility are lower than the China proposed arrangement.

Given Pakistan’s current economic challenges, partly owing to the impact of the COVID-19 pandemic, it will be a difficult undertaking for Pakistan to make timely payments if it takes commercial loans for the ML-I project. It would also lead to delays in the implementation of the project and possible cost overruns. Already the start of the project has been delayed for over four years. Given ML-I is a strategic project and consensus was reached between the leaders of two countries, it is important that both sides address such issues in a timely manner for early commencement of the construction of the project.

In September, 10th JCC was held virtually and the two sides reviewed progress on CPEC projects. Pakistan and China also reviewed progress on ML-I project and decided to remain engaged on finalizing its financing arrangements. As both countries consider ML-I a strategic project, it would be in their common interest for both to display flexibility and finalize the financing mechanism through a proactive approach.

After its completion ML-I will play a major role in enhancing connectivity and supporting new economic activity. Pakistan has already proposed extension of ML-I to the Torkham border and onwards to Afghanistan.

The Chinese side has expressed interest in exploring such an extension. When materialized, ML-I it will inevitably enhance connectivity with Afghanistan, Central Asia and directly enhance Pakistan and China’s trade with Iran, Turkey and Central Asia and go on to become a success story of the BRI. Besides, ML-I will be cherished as China’s major contribution toward Pakistan and its people’s well being from an old and time tested friend. Both Pakistan and China still rejoice and take pride in the joint venture construction of the Karakoram Highway; ML-I would be an additional feather in the cap.
 

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