Pakistan To Get $8.5B Investment By China for Railways, Gas Terminal and Pipeline

China continues to invest in major projects in Pakistan.

As part of the CPEC, they will invest about $8.5 billion to upgrade Pakistan’s rail network and to build a key gas pipeline with Iran to meet the country’s energy requirements, according to latest media reports yesterday.

The Central Development Working Party (CDWP) is Pakistan’s government body responsible for authorizing major projects. It approved $10 billion worth for two projects on Wednesday.

China will provide loans equivalent to 85 per cent ($8.5 billion) of the cost of each project.

Details about Pakistan Railways Upgradation Project

The project of upgrading of Pakistan Railways consists of work on existing Mainline (ML-I) and the establishment of a dry port near Havelian (Punjab) as part of the $46 billion China-Pakistan Economic Corridor (CPEC) package. The project is covered under the CPEC Framework Agreement which was signed during April 2015 visit of the Chinese President to Pakistan.

Gwadar-Nawabshah LNG Terminal & Pipeline Project

Another project cleared in principle is the Gwadar-Nawabshah LNG Terminal & Pipeline project. Its estimated cost is $2 billion including the $1.4 billion Chinese loan.

This project has strategic importance for Pakistan as it will eventually link the country’s gas network with the Iranian system.

The CDWP Chairman and Minister for Planning, Ahsan Iqbal said,

“The exact costs of both the projects will be firmed up after finalizing financing arrangements, after finalization of the financing arrangements, both the projects will be taken to the Executive Committee of National Economic Council (Ecnec) with firmed up cost for final approval.”

The project is planned to be completed in two phases in five years by 2021 on engineering, procurement and construction (EPC) mode. Phase-I will be completed by December 2017 and Phase-II by the year 2021 for the project.

Upgrading Pakistan Railways

Presently, Pakistan Railways is contributing less than 4 percent to the transportation of the country. The government intends to increase it to at least 20 per cent by 2025 and these projects will effectively contribute in achieving this purpose.