Govt approves Rs278.6 billion rail upgrade to support Reko Diq mineral transport

The government is moving ahead with a Rs278.62 billion upgrade of the 996-kilometre Main Line-3 (ML-3) railway corridor from Rohri to Koh-e-Taftan to facilitate the transportation of minerals from the multibillion-dollar Reko Diq mining project, The News reported. 

According to project documents, the scheme will be financed through $390 million in bridge financing from Reko Diq Mining Company (RDMC), along with funding from the federal government's Public Sector Development Programme (PSDP). The bridge financing will be repaid by the government through a lump-sum payment by June 2028, requiring the Ministry of Finance to arrange the necessary funds.

The project is scheduled for completion by 2033 and has been identified as the primary long-term transport solution for mineral exports from the Reko Diq mine, for which the government has already signed an agreement with Barrick Gold/RDMC.

The railway upgrade will be implemented in two phases comprising four packages. Phase I includes the 243km Rohri-Sibi section and the 522km Spezand-Alam Reg section, while Phase II covers the 14km Sibi-Quetta stretch and the 90km Alam Reg-Koh-e-Taftan section.

The project includes complete renewal of 195km of track between Rohri and Sibi and 636km between Quetta, Spezand and Koh-e-Taftan. It also provides for reconstruction of 457.5km of the Ahmedwal-Koh-e-Taftan section through engineered embankments and bridges, along with the construction of 11 new railway stations between Spezand and Alam Reg.

According to the PC-I, the upgraded line will improve safety, reduce derailments, shorten travel times and increase fuel efficiency, while enhancing the railway's capacity to transport mineral exports.

However, the Planning Commission, in its appraisal of the project, raised concerns over its financial sustainability and the absence of a comprehensive cost-benefit analysis.

The Commission noted that while the project is expected to reduce derailment-related losses and improve operational efficiency, the sponsoring agencies had not quantified the expected economic benefits or provided detailed freight traffic and revenue projections to justify the investment.

It also observed that no tariff structure, track access charges framework or revenue-sharing arrangement with RDMC had been finalised.

The appraisal warned that the government's obligation to repay the $390 million bridge financing by June 2028 could create fiscal pressure and repayment risks.

The Planning Commission also highlighted the project's dependence on Reko Diq as its principal freight customer, warning that reliance on a single client creates concentration risk for future revenues.

It further pointed out that the project allocates Rs46.38 billion for security, equivalent to around 17% of the total cost, and suggested exploring a cost-sharing arrangement with the provincial government.

The Commission also noted that no post-completion operation and maintenance funding had been included in the project documents, potentially understating the project's long-term lifecycle costs.

It added that the 6.5% escalation provision may prove insufficient given the project's seven-year implementation period and reliance on imported materials such as rails and fastening systems.