$390 million Reko Diq bridge loan to fund Railways ML-3 upgrade as Planning Commission flags repayment risks

Pakistan Railways’ 996-kilometre Main Line-3 project from Rohri to Sibi, Quetta and Koh-i-Taftan, estimated at Rs278.62 billion, is set to be financed partly through a $390 million bridge loan from Reko Diq Mining Company, as the Planning Commission raised concerns over repayment risks, foreign exchange exposure and security costs, Dawn reported. 

The loan, equivalent to more than Rs112 billion, will be repaid by the federal government in a lump-sum payment by June 2028.

The Central Development Working Party, chaired by Planning Minister Ahsan Iqbal, cleared the project for consideration by the Executive Committee of the National Economic Council (ECNEC), but directed the Ministry of Railways to address several concerns before formal approval.

The prime minister has already approved the $390 million bridge financing from RDMC, while the Economic Coordination Committee (ECC) of the cabinet has approved the related rail development and financing agreements. However, only Rs250 million has been allocated for the project in the FY2026-27 Public Sector Development Programme.

The $892 million ML-3 upgrade is primarily aimed at supporting transport requirements linked to the Reko Diq copper and gold project. RDMC is a joint venture in which Canada’s Barrick Gold Corporation holds 50%, while the remaining 50% is equally owned by the Balochistan government and three federal state-owned companies — OGDCL, PPL and GHPL.

According to Pakistan Railways, the project will ultimately be financed through the PSDP, with interim funding provided through RDMC and the federal government.

The project includes track renewal, rehabilitation of embankments and bridges, replacement of turnouts and construction of 11 new railway stations between Spezand and Taftan.

Implementation has been divided into two phases. Phase-I, from 2026 to 2030, is estimated at $585 million and will cover critical infrastructure works. Phase-II, from 2031 to 2033, will cover the remaining priority works at an estimated cost of $145 million.

Security arrangements during construction are expected to cost about $162 million, or Rs46.38 billion. The Planning Commission questioned the inclusion of this amount in the development budget, saying security was not a development activity.

The commission also noted that the security allocation accounted for nearly 17% of the total project cost and could affect the financial viability of the scheme. It asked whether the provincial government had been consulted to provide security through local police.

The commission also sought details on how security along the entire corridor would be maintained after completion, particularly after recent terrorist attacks and security incidents on parts of the ML-3 route.

It also questioned the project’s financial phasing, noting that Rs25.87 billion, or about 9% of the total cost, had been earmarked for the first year of implementation despite a seven-year execution period.

The commission warned that delays in securing funds could delay the project and lead to cost escalation, as seen in earlier railway projects.

Project implementation has already started. A joint venture led by M/s Zeeruk International has been appointed as consultant, while RDMC has agreed to assist Pakistan Railways in the procurement of critical machinery, equipment and other long-lead items.