CPEC railway line economic zone projects face delay

[Salman]

ISLAMABAD: The inability of federal and provincial governments to do away with their inefficiencies has held back benefits of some of the critical China-Pakistan Economic Corridor (CPEC) projects as an $8.2-billion project for upgrading main railway lines and a scheme for setting up special economic zones face delay.

The project for improvement of Pakistan Railways’ existing Main Line (ML-I) was planned to be completed in two phases between 2016 and 2020. However, its preliminary design has not been completed yet, creating hurdles in the way of coming up with the final cost and financing arrangements.

“The project cost can go up or down as the preliminary design will still take time,” said an official of the Planning Commission.

The matter came up for discussion in a meeting of the CPEC Coordination Review Committee, chaired by newly appointed Planning Minister Ahsan Iqbal. Chinese Ambassador to Pakistan Sun Weidong was present in the meeting.

“Pakistan Railways told the meeting that the project’s technical study will be done by the end of this year,” said Iqbal after the meeting.

He revealed that he would take up the issue of financing the rail line with Chinese authorities during his upcoming visit to Beijing.

The Planning Commission official said in order to overcome the challenges, it had been decided to split the project into two parts.

Preliminary design of the first phase was almost ready and a new PC-I would be submitted soon for approval of the Central Development Working Party (CDWP), he said.

In June last year, the CDWP approved, in principle, the $8.2-billion PC-I of the project, but it called for first working out its firm cost and financing arrangements before seeking final go-ahead from the Executive Committee of National Economic Council. Planning Commission documents showed that the first part cost would be roughly $3.2 billion.

The ML-I project comes under the CPEC framework. According to an understanding, 15% of the cost will be borne by Pakistan and 85% will be financed by relevant Chinese financial institutions. At present, Pakistan Railways handles less than 4% of the country’s traffic volume, which the government intends to increase to at least 20% by 2025.

The project involves upgrading of the railways existing main line from Karachi to Peshawar having total length of 1,872 km including the 91km Lodhran-Khanewal section and the 55km Taxila-Havelian section.

Major scope of work will involve upgrading of the existing double and single tracks over 1,598 km and overhauling of the existing 930km double line.

Economic zones

Another important feature of CPEC is the setting up of Prioritised Special Economic Zones, which will serve as a hub of industrial activities and are critical for job creation.

“A Chinese expert team is coming next month and it is unfortunate that provincial governments have sought two more months to finalise feasibility studies for their respective economic zones,” said the planning minister.  For the past one year, he said, he had been pushing the provinces to complete work on the feasibility studies.

Iqbal said the performance of the Board of Investment (BoI), which takes centre stage in the planning and execution of economic zones, was also not up to the mark.

“BoI’s administrative infrastructure is incomplete and I have directed the authorities to submit a plan within one week,” said the minister. “We need a modern BoI to work on CPEC industrial zones.”

The minister noted with satisfaction that Gwadar projects had started moving forward. According to him, the Gwadar Eastbay Expressway project’s groundbreaking will be performed by the prime minister on his return from the United States. The design of the Gwadar New International Airport has been sent to China for review and it is expected to be finalised by the end of this year.

Iqbal said during his upcoming visit, dates for a meeting of the 7th CPEC Joint Cooperation Committee would be finalised in consultation with the Chinese authorities.