Pakistan Turns to ADB for Full Funding of $7 Billion Mainline-I Rail Project

Strategic Insights -

The Pakistani government has opted to seek full financing from the Asian Development Bank (ADB) for its $7 billion Mainline-I rail project after China withdrew its commitment to provide 85% of the funds. The project, crucial for transporting copper and gold from the Reko Diq mines, has been a decade-long endeavor. The ADB, along with the Asian Infrastructure Investment Bank (AIIB), is prepared to cover around 60% of the funding for the Karachi-Rohri section, with an estimated cost of $2 billion. Pakistan is now requesting these financial institutions to take a larger role, funding the entire project in phases. The ADB has asked for detailed design documents to assess the specific financial requirements of the project.

Key Takeaways:

  • The Asian Development Bank (ADB) will fully fund the $7 billion Mainline-I rail project in Pakistan after China withdrew its commitment.
  • The ADB and Asian Infrastructure Investment Bank (AIIB) are prepared to cover around 60% of the funding for the Karachi-Rohri section, with an estimated cost of $2 billion.
  • Pakistan is seeking ADB's involvement in funding the entire project in phases, starting with the Karachi-Rohri section.
  • The ADB has requested detailed design documents to assess the project's financial requirements.
  • The bank has committed to a $10 million Project Readiness Facility to validate previous feasibility studies and review detailed designs for the Karachi-Rohri and Rohri-Multan sections.
  • The ADB expects to approve multi-tranche loans in partnership with AIIB and the European Investment Bank, contingent on the findings of the readiness facility.
  • The combined estimated cost for the Karachi-Rohri and Rohri-Multan sections is $3.6 billion, but competitive bidding is expected to lower the final price.

Statistics:

  • Mainline-I rail project: $7 billion
  • Estimated cost of the Karachi-Rohri section: $2 billion
  • ADB's proposed contribution to the Karachi-Rohri section: around $1.2 billion
  • Project Readiness Facility: $10 million
  • Combined estimated cost for the Karachi-Rohri and Rohri-Multan sections: $3.6 billion

Sources:

  • The Express Tribune
  • Asian Development Bank (ADB)