Govt Will Not Provide Sovereign Guarantee for Karachi Circular Railway

The Federal Government has decided to not provide any sovereign guarantee for Karachi Circular Railways (KCR) Project, well-informed sources told ProPakistani.

The sponsor of the project recommended the sovereign guarantee by the government of Pakistan, however, the Executive Committee of the National Economic Council (ECNEC) didn’t approve it.

The Executive Committee of the National Economic Council (ECNEC), which met last month, had decided that “there shall be no sovereign guarantee of the government of Pakistan for 43-kilometer KCR project,” the source added.

The source said that although the ECNEC formed a committee under the then Finance Minister and comprising Ministers for Planning, Secretary Finance, relevant consultants/financial consultants on KCR to “refine, if possible, the proposed transaction structure of KCR, to achieve maximum benefit for the government.” However, the forum added that if no improvement can be found then the project shall stand approved.

As per the Karachi Circular Railway (KCR) project documents, a 43-kilometer dual-track Urban Rail Mass Transit System will be constructed in three years on a Public-Private Partnership (PPP) basis. The project is expected to serve a daily ridership of 457,000, which is expected to soar to one million a day by the end of the 33-years concession period.

The project would be completed with an estimated cost of Rs. 201.5 billion, which will be shared by the government of Pakistan, the province of Sindh, and the private concessionaire.

According to the financing model, the Federal Government will provide a subsidy of Rs. 90.6 billion, Sindh will provide Rs. 6 billion while the remaining Rs. 105 billion will be provided by the concessionaire. Of its share of Rs. 90.6 billion, the Federal Government will provide Rs. 70 billion for civil works and the remaining for overhead expenditures.