The Public Private Partnership Authority (PPPA) Board on Tuesday approved the project proposal and transaction structure for development and operation of Karachi Circular Railway (KCR) project.
The approval was given during the 19th board meeting of PPPA chaired by Federal Minister for Planning Development & Special Initiatives Asad Umar.
According to officials the project with its transaction structure approved by the board will be launched after approval by the National Economic Council’s (ECNEC) Executive Committee.
The board reviewed key statistics and components of the project proposal of KCR which envisaged the project to be built on a public-private partnership basis whereby the private sector would be responsible to finance the construction of the civil works, electrical & mechanical component (including procurement of rolling stock) and operations & maintenance of the project from its own resources under a single package contract.
According to the approved project proposal the project will be implemented on a user charge basis and the Government of Pakistan (GOP) will provide Capital Viability Gap Funding (VGF) in order to improve its financial viability and attract adequate investor interest.
The private sector would also be given a Minimum Revenue Guarantee (MRG) for the initial operational years and a right to undertake commercial development of the KCR stations to supplement fare and non-fare revenues incidental to the project.
Asad Umar while highlighting the importance of the project said “the project is an important part of the Karachi Transformation Plan and will play a pivotal role in providing an affordable and reliable public transport system to Karachiites’.