ISLAMABAD: The Executive Committee of the National Economic Council (Ecnec) approved a project for improvement of the vital Mainline-1 railway track on Wednesday. The estimated cost of the project is Rs1.137 trillion.

The Ecnec also gave its approval to three other development projects, with a total estimated cost of Rs114 billion.

The meeting was chaired by the adviser to the prime minister on finance and revenue, Dr Abdul Hafeez Shaikh.

The projects for upgrade of Pakistan Railways’ existing Mainline-1 (ML-1) and establishment of a dry port near Havelian was approved by the Ecnec at a rationalised cost of $6.807bn on cost-sharing basis between the governments of China and Pakistan.

About 90pc of the cost will be provided by Chinese banks in the shape of long-term loans on conditions yet to be negotiated between the two sides.

Estimated cost of the plan is Rs1.1tr

The remaining 10pc will be borne by the federal government. About Rs672bn (59pc of the total cost) will be spent on local material, equipment and labour cost while machinery and equipment worth about $2.7bn will be imported.

The execution of the project shall be made in three phases. In order to avoid commitment charges, the loan amount for each package will be separately contracted.

Under this overall project, the existing 2,655km track will be upgraded, said an official statement. The speed of passenger trains shall increase from 65-110 kilometres per hour to 165km per hour and line capacity will increase from 34 to 137/171 trains each way per day.

The ministry of railways will constitute a project steering committee for effective supervision and implementation of the project. The government has already decided to set up a separate entity, to be known as Mainline-1 Authority, for smooth implementation of the Karachi-Peshawar rail track.

A restructuring plan for Pakistan Railways has also been approved by the prime minister. Under the plan, four new companies would be carved out.

These include Railway Holding Company, on the pattern of the power sector’s Pakistan Electric Power Company as an umbrella organisation, Freight Traffic Management Company, Passenger Traffic Mana­gement Company and Infrastructure Management Company.

In June this year, the Central Development Working Party had recommended the project cost at $7.2bn and referred it to Ecnec for approval. But the Planning Commission said on Tuesday the estimated cost referred to Ecnec for approval was $6.8bn. This is because of termination of the line at Peshawar instead of the earlier proposal of extending it to Torkham. The Karachi-Hyderabad section will be built on commercial lines under PPP mode. The ML-1 is a high-priority project of the government irrespective of the political divide.

The project remained under debate because of its huge financial impact, the US opposition to Chinese investments in Pakistan and limitations of the government under the debt sustainability perspective of the IMF.

Pakistan Railways had worked out the project cost at $9.2bn, but it was scaled down by the Planning Commission and the ministry of communications through a series of cost-cutting measures. The two governments will now finalise the financial terms and conditions.

The Ecnec also approved the Pakistan Single Window project at a cost of Rs11.074bn. The Federal Board of Revenue shall be the sponsoring agency for this project.

The project also involves a Rs9bn foreign exchange component (FEC). It is envisaged for completion by June 2023 and expected to improve the country’s global ranking in cross-border trade indicators.

The project is expected to serve as the integration point bridging cargo/logistics systems and other trade-related processes. It will provide an automated single-entry centralised hub for submission and processing of 90pc of the licences, permits, certificates and other documents for external trade.

The Ecnec approved the change in cost-sharing ratios of the Asian Development Bank and its co-financing partners for “construction of BRT Red Line Project in Karachi” at a cost of Rs78.384bn, including an FEC of Rs66.378bn.

It will use cattle-based biomethane as fuel. The project was earlier approved by Ecnec on Aug 29 last year.

Scholarships

The meeting approved a PhD scholarship programme under the US-Pakistan Knowledge Corridor (Phase-1) at a revised cost of Rs25.226bn, including FEC of Rs24.303bn.

In the revised PC-1 the scope of the project has been curtailed to 1,000 scholarships (from 1,500 scholarships) mainly due to appreciation of the dollar against the rupee and inclusion of tuition fees and research grant.

Published in Dawn, August 6th, 2020