THE Asian Development Bank will fund upgrades to part of Pakistan’s creaking railway system, replacing China, after prolonged delays in securing financing from Beijing threatened to put a strain on a strategic mining project, two sources said yesterday.
An extensive revamp of 1,800km (1,118 miles) of railways has been the centrepiece of a $60 billion Chinese investment programme in Pakistan announced in 2015 as part of Beijing’s Belt and Road Initiative global infrastructure push. A decade of negotiations, however, have yet to produce a finance package for the rail upgrades – the single biggest project under the programme with China. And Pakistan is, meanwhile, struggling to repay Chinese debt owed for other projects.
The ADB is in advanced talks to lead the financing of a $2bn upgrade of a 500-km stretch of the railway line from Karachi to Rohri in the country’s south that had previously been part of the Chinese project, two sources with direct knowledge of the discussions told Reuters.
The upgrade has become urgent, they said, as it is needed to transport copper ore from the Reko Diq mine currently being developed by Canada’s Barrick Mining Corp.
“We will have a crisis. How will you evacuate output from Reko Diq? The exhausted line will come under even more pressure,” one of the sources, a senior government official, said.
There was no immediate comment from Pakistan’s railways ministry or China’s foreign ministry.
The deal, expected to be announced later this month, would see the ADB lead a consortium to finance the project and bring in an international engineering contractor to carry out the work through a competitive bidding process, the sources said. The ADB announced $410 million in financing for the Reko Diq mine itself earlier this week. And its president is due to visit Islamabad next week, the sources said.
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