Pakistan has turned to the Asian Development Bank (ADB) to fully fund its $7 billion Mainline-I (ML-I) rail project after China withdrew its earlier commitment to provide 85% of the financing, The Express Tribune reported, citing sources.
The country had hoped for a decade that China would support the project, but the Chinese government pulled out due to concerns over financial terms, prompting Pakistan to explore alternative funding options with the ADB and other multilateral lenders.
The ADB, along with the Asian Infrastructure Investment Bank (AIIB), is prepared to cover around 60% of the funding for the crucial 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. However, due to the project’s large scale, ADB may focus on specific sections initially, starting with Karachi-Rohri.
In discussions between Prime Minister Shehbaz Sharif, Finance Minister Muhammad Aurangzeb, and ADB President Masato Kanda, Pakistan emphasised the need for swift financing to complete the Karachi-Rohri section, which is vital for transporting copper and gold from the Reko Diq mines, expected to begin production by 2028.
The ADB has asked for detailed design documents to assess the specific financial requirements of the project. It is anticipated that the bank, in collaboration with AIIB, will contribute around $1.2 billion for the Karachi-Rohri section, but the final financing arrangements will depend on detailed assessments.
The Planning Commission is set to receive revised project cost documents in the coming days for further evaluation.
While Pakistan has secured some progress in securing funding for the Karachi-Rohri section, it is facing challenges in finding backing for the ML-III section, which will handle the transportation of minerals from Reko Diq. Given its limited commercial viability, securing funding for this section is proving difficult.
To ensure the project’s readiness, the ADB has committed to a $10 million Project Readiness Facility, which will validate previous feasibility studies and review the 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 compared to earlier projections.
The ADB President reaffirmed the bank’s commitment to supporting Pakistan in infrastructure development, including climate resilience, energy transition, and resource mobilisation.
