Islamabad:
On Wednesday, Pakistan asked the Asian Development Bank (BAD) to fully finance the Mainline-I railway project (ML-I) of nearly $ 7 billion in consortium with other multilateral lenders after omitting funding from China.
The country has waited for almost a decade for the financing commitment of 85% of China for the project. The government has now returned to the BAD, which wanted to finance in 2016 but retired due to the insistence of Beijing on single funding.
Manila-based lender, as well as the Asian Investment Infrastructure Bank (AIIB), showed the desire to provide funding for around 60% for the Karachi-Rohri section, sources said.
They added that the AfDB can also consider finance other sections, but due to the size of the project, the lender can adopt a section approach.
Pakistan raised the question of the complete financing of the BAD, AIIB and other multilateral agencies at the meeting of Prime Minister Shehbaz Sharif and the Minister of Finance Muhammad Aurangzeb with the president of the ADB, Masato Kanda.
The early completion of the Karachi-Rohri section is essential for the transport of copper and gold from Reko Diq mines, sources said. The Reko Diq Mining Company plans to start production by 2028, requiring a rail network for gentle and timely transport.
The AfDB has requested detailed design documents from the Karachi-Rohri section to assess real financing needs. It can associate with AIIB to provide 60% of funding, around $ 1.2 billion, for this section, they added.
The planning committee should receive revised cost documents this week to determine the real cost.
For mineral transport, Pakistan needs rail links from Reko Diq to Gwadar and Reko Diq in Karachi, which require quality infrastructure in Ml-I and Ml-III. But the government has not found funding for ML-III, which will largely manage copper and gold transport and may not be commercially viable, sources said.
The AfDB has promised an installation of preparation for the $ 10 million project by November to validate the previous Chinese feasibility study of ML-I, examine the detailed design of the project and examine the Rohri-Multan section. Based on its results, the AfDB is expected to approve multi -pricing loan facilities with AIIB and the European Investment Bank, sources have added.
Government estimates have placed the Karachi-Rohri section at $ 2 billion and the Rohri-Multan section at $ 1.6 billion, which is only $ 3.6 billion. However, it is expected that due to international competitive auctions, the total cost will still be lower than the cost provided for in the bilateral framework.
The Prime Minister wanted to organize the ML-I revolutionary ceremony funded by the BAD in June of next year, but the Ministry of Railway and the BAD gave December as a period, the sources said.
The Bad president has linked funding to the results of the project preparation project report.
China previously asked Pakistan to reduce ML-I cost by almost $ 10 billion to $ 6.7 billion to make it financially viable. It was the only “strategically important” project declared within the framework of the Chinese-Pakistani Economic Corridor (CPEC), and Islamabad demanded a concessional loan.
The project was faced more than seven years late due to the strong debt of Pakistan. Pakistan had requested a loan equal to 85% of the cost of China, but Beijing refused concessional conditions.
Prime Minister Shehbaz Sharif and President Xi Jinping had agreed a few years ago to advance the ML-I project in phases.
The original ML-I track was 1,872 kilometers long, but was then reduced to reduce costs.
Sources have warned that even with the AfDB and other multilateral funding, the organization of the red coverage of the Ministry of Finance will be difficult due to the small size of the public sector development program. The ministry must provide more than 600 billion rupees in rupees for the Karachi-Rohri section over the next three years.
The President of the ADB also met the Minister of Finance Aurangzeb, who asked for an increased guarantee limit to issue Panda obligations. Originally scheduled for $ 250 million this year, the ministry now plans to raise $ 750 million to fill the financing gaps.
Aurangzeb said that he would go to China with the Prime Minister to discuss floating panda obligations, requiring higher BAD warranty limits.
A Ministry of Finance document said that Aurangzeb underlined Pakistan’s priorities for more in -depth collaboration with the BAD energy transition, climate resilience, transport, human capital and the mobilization of resources.
He expressed his assessment for the coherent partnership of BAD and reiterated the determination of Pakistan to build climate resilience and to improve disaster preparation after recent floods.
Aurangzeb also thanked the president of the ADB for having prioritized Pakistan as the first country he visited after having assumed his functions, recalling meetings before Washington in April.
The Minister has recognized the substantial support of the AfDB in recent years, citing reforms in the mobilization of resources, the financial inclusion of women, the financing of disaster risks and the transition of clean energy.
The Bad president appreciated the economic reforms and the resilience of Pakistan, congratulating progress in the stabilization of the economy and the advanced structural changes, said the ministry.
He ensured the continuous support of the BAD in climate adaptation, the challenges of the population, the infrastructure and the mobilization of resources.
Kanda is also committed to preparing to help Pakistan launch its first Panda obligation and other innovative financing tools.
