Cabinet committee rejects commercial agreement between Pakistan Railways and DP World, seeks domestic financing alternatives

The Cabinet Committee on Inter-Governmental Commercial Transactions (CCOIGCT) has declined to approve a proposed commercial agreement between Pakistan Railways and Dubai’s DP World, urging the Railways Division to seek alternative domestic financing sources for the project, specifically exploring joint financing possibilities with the Ministry of Maritime Affairs and Karachi Port Trust (KPT), according to a news report. 

The proposed agreement centered on the development of a dedicated freight corridor, including a multimodal logistics park and the construction of tail freight terminals along Pakistan Railways’ network. The initiative, stemming from an inter-governmental framework agreement between Pakistan and Dubai’s Ports, Customs, and Free Zone Corporation, was intended to address congestion and streamline the movement of trade cargo.

The committee noted that with the project’s relatively modest financial requirement of $20 million, it could be funded through local resources. Potential financing avenues such as public-private partnerships or investment from established domestic investors were suggested. 

The committee also highlighted the significant role of KPT in the project’s success and recommended developing a business and financing plan in partnership with the port authorities and the Ministry of Maritime Affairs.

The CCOIGCT emphasized that foreign funding should be reserved for large-scale development projects that cannot be financed with domestic resources. The committee’s decision reflects the government’s preference for leveraging local financial capacity and encouraging domestic investment in infrastructure projects.

This rejection follows a series of discussions, including the establishment of a negotiation committee in February 2024 and multiple meetings between DP World and Pakistan Railways, leading up to the submission of the commercial agreement for approval.