LAHORE: Railways Minister Sheikh Rashid Ahmed has said that the cost of Pakistan Railways’ (PR) ML-1 project under the China Pakistan Economic Corridor (CPEC) has been cut by $2 billion.
The mega project to revamp the colonial-era line stretching 1,872 km (1,163 miles) from Karachi to the northwestern city of Peshawar was initially priced at $8.2 billion, but wrangling over costs has led to delays.
The changes are part of Islamabad’s efforts to rethink key Belt and Road Initiative (BRI) projects in Pakistan, where Beijing has pledged about $60 billion in financing but the new government of Prime Minister Imran Khan appears to be more cautious about the Chinese investment.
“Pakistan is a poor country that cannot afford huge burden of the loans,” Rashid told a news conference in the city of Lahore.
“Therefore, we have reduced the loan from China under CPEC for rail projects from $8.2 billion to $6.2 billion,” he added, referring to the China-Pakistan Economic Corridor (CPEC).
Rashid said the government remains committed to the Karachi-Peshawar Main Line-1 (ML-1) project but added that he wishes to further reduce the cost to $4.2 billion from $6.2 billion.
Islamabad has balked at the financing terms and has pushed for deeply concessional loans for ML-1. It also invited third countries to join or for the Chinese to be investors in the project through the build-operate-transfer (BOT) model that would rely less on debt.
“CPEC is like the back bone for Pakistan, but our eyes and ears are open,” minister said.
The ML-1 is the spine of the country’s dilapidated rail network, as well as the biggest source of revenue. Pakistan’s rail system has struggled to break even for decades as passenger numbers plunge, train lines close and the vital freight business nosedives.