Japan agrees to provide aid for KCR, two other projects

[LahoreEstate]

ZARAR BHUTTA
ISLAMABAD (April 15 2009): Japan has agreed to provide assistance for three projects, including Karachi Circular Railway project (KCR), sixth secondary transmission and grids project of Gujranwala Electric Power Company (Gepco) and New Khanki Barrage. Japan may make formal announcement in the Friends of Democratic Pakistan (FoDP) meeting scheduled in Tokyo on April 17.

The sources revealed to the Business Recorder on Tuesday that the government had requested Japan to provide assistance for 20 projects that also included Neelum Jhelum hydropower project and Bhasha dam, but Japan agreed to extend support for three projects. The assistance will be provided through Japan International Co-operation Agency (Jica).

The consultant Scott Wilson Railways, UK, appointed by Pakistan Railways revalidated the feasibility study report on revival of KCR. The draft report of the consultant advised to conduct detailed feasibility study of the project. The Jica has already undertaken the supplementary studies, including demand traffic forecast model and environment impact assessment (EIA) studies.

The loan will be STEP loan repayable in 40 years, including 10 years grace period. The length of revival of KCR project is 49.1 kilometres and the cost is 872.316 million dollars. Under the STEP loan, Pakistan would ensure import of 70 percent material for the project and 30 percent locally produced material to be used to complete the project, sources said.

Japan has also agreed to provide assistance for project "sixth secondary transmission and grids project, to be undertaken by the Gepco, costing Rs 5173.331 million with foreign component of Rs 1200.285 million. Under the project, the transmission lines of the Gepco will be improved and its network will be extended. The Punjab Irrigation Department has planned the construction of a new barrage at Khanki and PC-1 of the project has been prepared. The Jica is expected to provide assistance for the project.

Pakistan is also seeking assistance from Islamic Development Bank (IDB) to provide financing for Diamer Bhasha dam and Neelum Jhelum hydropower project. The IDB has initially indicated to provide 30 million dollars for Bhasha dam in 2011.

Pakistan requires 11.4 billion dollars for Diamer Bhasha dam against earlier estimates of 6.5 billion dollars in 2005. The government will establish a consortium of all major multilateral and bilateral donors, led by the Asian Development Bank (ADB), before the next budget for funding the construction of Diamer-Basha Dam. The IDB may also become part of the upcoming consortium for investing into Basha Dam.

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