Islamabad:
Pakistan on Wednesday requested the Asian Development Bank (ADB) to completely finance the railway project of almost $ 7 billion Mainline-I (ML-I) in consortium with other multilateral lenders after not obtaining funds from China.
The country waited almost a decade for the financing commitment of 85% of China for the project. The government has now returned to ADB, which was willing to finance in 2016, but retired due to Beijing’s insistence on the only financing.
Manila headquarters, together with the Asian Infrastructure Investment Bank (AIIB), has shown a willingness to provide about 60% financing for the Karachi-Rohri section, Fuentes said.
They added that the ADB can also consider financing other sections, but due to the size of the project, the lender can adopt an approach in section terms.
Pakistan raised the question of the full financing of ADB, AIIB and other multilateral agencies during Prime Minister Shehbaz Sharif and the meeting of the Minister of Finance Muhammad Aurangzeb with the president of ADB, Masato Kanda.
The early completion of the Karachi-Rohri section is essential to transport copper and gold from the Reko diq mines, Fuentes said. The Reko Diq mining company plans to start production by 2028, which requires a railway network for soft and timely transport.
The ADB has requested detailed design documents of the Karachi-Rohri section to evaluate real financing needs. It can be associated with the AIIB to provide 60% of the funds, around $ 1.2 billion, for this section, they added.
The planning commission is expected to receive reviewed documents of the project cost this week to determine the real cost.
For mineral transport, Pakistan needs railroad links from Reko diq to Gwadar and Reko diq to Karachi, which require quality infrastructure in ML-I and ML-III. But the Government has not found financing for ML-III, which will largely manage copper and gold transport and may not be commercially viable, fountains said.
The ADB has promised a project preparation installation of $ 10 million for November to validate the Chinese viability study of ML-I, examine the detailed project design and review the Rohri-Multan section. According to its findings, the ADB is expected to approve the multiple loan facilities with AIIB and the European Investment Bank, the sources added.
Government estimates placed the Karachi-Rohri section at $ 2 billion and the Rohri-Multan section at $ 1.6 billion, which raises only these two to $ 3.6 billion. However, it is expected that due to international competitive tender, the total cost will be even lower than the projected cost under the bilateral framework.
The prime minister was anxious to celebrate the opening ceremony of the ML-I funded by BAD in June next year, but the Ministry of Railroads and ADB gave December as the deadline, the sources said.
The president of ADB linked the funds with the results of the project preparation center.
China had previously asked Pakistan to reduce the cost of ML-I of almost $ 10 billion to $ 6.7 billion to make it financially viable. It was the only “strategically important” project under the economic corridor of China-Pakistan (CPEC), and Islamabad demanded a concessional loan.
The project has faced more than seven years of delay due to the high indebtedness of Pakistan. Pakistan had sought a loan equal to 85% of China’s cost, but Beijing rejected the concessional terms.
Prime Minister Shehbaz Sharif and President Xi Jinping had agreed for a couple of years ago to advance in the ML-I project in phases.
The original ML-I track had 1,872 kilometers long, but then reduced to reduce costs.
The sources stated that even with ADB and other multilateral funds, organizing the coverage of rupees 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 RS600 billion in rupture of rupees only for the Karachi-Rohri section in the next three years.
The president of ADB also met with the Minister of Finance, Aurangzeb, who requested an improved guarantee limit to issue panda bonds. Initially planned at $ 250 million this year, the Ministry is now considering $ 750 million to join financing gaps.
Aurengzeb said he would travel to China with the prime minister to discuss floating panda bonds, which requires higher AdB guarantee limits.
A brochure of the Ministry of Finance said that Aurengzeb highlighted Pakistan’s priorities for a deeper collaboration with ADB in energy transition, climate resistance, transport, human capital and resource mobilization.
He expressed his appreciation for the consistent Association of ADB and reiterated Pakistan’s determination to develop climatic resilience and improve disaster preparation after recent floods.
Aurengzeb also thanked the president of ADB for prioritizing Pakistan as the first country he visited after taking office, remembering previous meetings in Washington in April.
The minister recognized BAD’s substantial support in recent years, citing reforms in the mobilization of resources, the financial inclusion of women, the financing of the risk of disasters and the transition of clean energy.
The president of ADB appreciated the economic reforms and resilience of Pakistan, praising progress in the stabilization of the economy and advancing in structural changes, the ministry said.
He assured the continuous support of ADB in climatic adaptation, the challenges of the population, the infrastructure and the mobilization of resources.
Kanda also promised the preparation of helping Pakistan launch his first Panda bonus and other innovative financing tools.
