Pakistan railway project hanging in balance as China delays finance
Feb 22, 2022
Islamabad [Pakistan], February 23 : Pakistan railway line project, Main Line (ML-1), is hanging in the balance owing to the financial delays by Exim Bank of China.
There is a bone of contention between Pakistan and China regarding the maturity period for loans. Beijing wants to cut short the tenure of the loan to 15-20 years and finance an 85 per cent share of the project while Islamabad proposes a 25-year tenure.
Another major issue lying in Pakistan's path is the unskilled workforce that cannot handle a modernised rail system based on the latest technology. Meanwhile, China has shown readiness to finance the project using RMB (Chinese Currency) to internationalise the currency.
Junaid Akbar, Chairman of National Assembly Standing Committee on Planning, Development and Special Initiatives, with sight to pressurize Beijing, said, if financial negotiations with China did not conclude successfully, Islamabad would turn to Russia or any other country.
However, the likelihood of any other country to invest a large amount seems negligible, reported Islam Khabar. Pakistan's economy is already under stress and the delay in this project is going to be a setback to Islamabad's claim of direct employment for 20,000 locals.
Islamabad has also been proposed to hand over the project to Chinese companies to run for a period of three to five years.
"The biggest question arising before the policymakers was that who will run the modernised railways after the completion of ML-1," according to an official.
Pakistan Railway is already dependent on government subsidies and the Railways is plagued with the problem of insufficient revenue.
The railways' departmental deficit during the current Pakistan Tehreek-e-Insaf (PTI)-led government increased to PKR 46 billion in 2021 and total losses amounted to PKR 1.19 trillion, mainly due to low traffic, both passenger and goods.
Similarly, the number of freight carriages was reduced from 16,159 to 14,327. On viability count, PR has suffered an estimated loss of PKR 1.2 trillion during the past 50 years. Its losses in the FY 2017 were approximately PKR 40 billion. Pak media reports indicate that 57 passenger trains had been shut down so far and now only 85 trains were available for various routes across the country, reported Islam Khabar.
