Govt announces expansion and reconstruction of Main Line 1 project under CPEC

September 14, 2018 (MLN): The PTI regime has announced the expansion and reconstruction of Karachi-Lahore-Peshawar railway track, known as the Main Line 1 project (ML1) under the China-Pakistan Economic Corridor (CPEC).

The expansion would require certain changes in the framework agreement signed by China and Pakistan last year.

According to the Planning Minister Mr. Khusro Bakhtyar, the ML1 project has been conceived to build on the Engineering-Procurement-Construction (EPC) model that would shift the entire financing risk to the federal government.

The government has also started exploring the possibility of constructing the project on BOT model to avoid risks, he added.

Due to its $9 billion cost, there was also a dispute between railways and the Ministry of Finance over the ownership of loan and its servicing.

As per official sources, the Planning Ministry said the government may have to undertake a new feasibility study before constructing the project on BOT.

However, the minister said it will be in the best interests of Pakistan to complete the ML1 project on the BOT model. Under the original CPEC plan, China had promised to give $2.2 billion out of the then estimated cost of $8.2 billion of the project.

The Asian Development Bank (ADB) was required to give $6 billion loan but China opposed the plan and ousted the ADB. Under the May 2017 framework agreement, the project will solely be funded by China.

According to the Framework Agreement of the ML1, China will provide 85% of the project cost as concessionary loan. The project has been declared ‘strategically important’ by both the countries.

The PTI government has taken corrective measures in this regard and criticized the former PML-N government for not protecting Pakistan’s economic interests while signing the $46 billion deals under the Belt and Road Initiative of the Chinese government.

The planning minister was reported saying that the PML-N government did not give importance to the ML1 project the way it gave preference to $2 billion Orange Line Project and two road projects worth $6 billion.

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