Pakistan asks China to accelerate work on ML-1, KCR

ISLAMABAD: Pakis­tan on Monday asked China to expedite the process for implementation of the first phase of $10 billion Mainline-1 (ML-1) — the 1,872km railway track along with associated facilities from Karachi to Peshawar — and $2bn Karachi Circular Railway (KCR) as agreed between the leadership of the two nations in November.

Pakistan “requested strong support of National Development and Reforms Commission (NDRC) and other relevant Chinese government institutions to advance implementation of important projects like ML-1, KCR and key energy projects in line with the leadership consensus,” said a statement issued by the ministry of planning and development after a bilateral meeting on China-Pakistan Economic Corridor (CPEC).

Besides ML-1 and KCR, two hydropower projects, including 1,124MW Koh­ala Hydropower Project, had been on hold for various reasons, particularly financial limitations and insurance challenges.

During Prime Minister Shehbaz Sharif’s visit to Beijing on Nov 1, 2022, the Chinese political leadership agreed to fast-track processing for ML-1 by immediately triggering their respective teams. It was agreed at the time to arrange bidding for the project by December and negotiations for financing terms and conditions should follow after the selection of the bidder.

However, the agreed progress could not be achieved as power sector dues increased despite creation of a revolving fund to meet at least the requirements of financial institutions.

After Mr Sharif’s return, Finance Minister Ishaq Dar said KCR was also discussed at those meetings and the project would soon be in the implementation phase.

Pakistan’s troubles with IMF, however, followed soon afterwards and payables to Chinese Independent Power Producers went beyond Rs350bn.

ML-1 also could not attract financing commitments from the Chinese institutions, leading these delays to get parallel funding offers from the Asian Development Bank that was previously interested in providing loans for the mega project but had been elbowed out on the Chinese insistence.

In January, Planning and Development Secretary Zafar Ali Shah said that a $2.7bn loan request had been placed with China for upgradation of the first phase of ML-1 that spread mostly in Sindh and partially in Punjab where the track was damaged by last year’s super floods. The ground level of the track has to be increased with redesigning.

At a subsequent media briefing, Mr Shah said ADB had again offered to finance the ML-1 even though the government was pursuing a part of the project with China.

Earlier, Planning Minister Ahsan Iqbal confirmed that the country had declined ADB’s offer as China wanted to fund the project single-handedly. “China strongly argued that two-sourced financing would create problems and the project would suffer,” Mr Iqbal had said at a presser in 2017.

Pakistan, during Mr Iqbal’s visit to China last week, again took up the matter with Li Chunlin, Vice Chairman of China’s NDRC.

At a follow-up progress review meeting on Monday, the two sides discussed important CPEC projects and minutes of the 11th JCC meeting.

Chief Economist and CPEC Project Director Nadeem Javaid and his Chinese counterpart Pan Jiang, Director General of NDRC’s National Cooperation Department, co-chaired the meeting attended by representatives of ministries of planning, energy, industry, communication, agriculture, interior, science & technology and information technology & telecom and board of investment.

The two sides expressed satisfaction on the smooth implementation of various CPEC projects and agreed that all pending issues will be resolved amicably in the spirit of traditional cooperation, mutual understanding, complete trust and brotherhood.

“Both sides expressed satisfaction on progress made in the four priority special economic zones (SEZs) namely Rashakai, Allama Iqbal Industrial City, Dhabeji and Bostan SEZs and agreed to further expedite the progress so as to attract relocation of high quality industries,” said the statement.

The meeting appreciated the signing of Framework Agreement for Industrial Cooperation and both sides committed to holding bi-annual meetings to review the implementation of framework.

It may be noted that 2023 marks the decade of CPEC and the strong partnership between Pakistan and China.