The Asian Development Bank (ADB) has offered to bankroll the $10 billion Mainline-I (ML-I) project of the China-Pakistan Economic Corridor (CPEC), a move that may require Beijing’s approval in order to bring on a second financier.
This is the second time the ADB has made the offer for the scheme designated as strategically important under the CPEC framework.
ADB offered to finance the aforementioned scheme nearly eight years ago, but China declined. The crisis lender has only offered to finance the portion of the ML-I project that has been severely damaged by the recent floods. Understandably, the terms of financing and scope of the ADB offer haven’t yet been finalized at this time. Pakistan planned to borrow $8.4 billion from China, but negotiations have yet to be completed, and Islamabad will arrange the remaining $1.5 billion.
In rupee terms, the project’s cost has risen to Rs. 2.7 trillion at today’s exchange rate. Pakistan had initially decided to implement the project in stages and stagger the $8.4 billion loan accordingly to ensure smooth construction while also booking loans as needed. However, authorities have so far failed to bring the scheme to fruition.
During Prime Minister Shehbaz Sharif’s visit to China last year, the Pakistani side proposed signing a joint memorandum outlining project milestones, but nothing was finalized. A 1,733 km-long route will be rehabilitated as part of the project, as well as 482 underpasses, 53 flyovers, 130 biker bridges, and 130 stations. The ML-I route begins in Karachi and travels through Kotri/Hyderabad, Rohri, Multan, Lahore, and Rawalpindi.
The ML-I project was initially green-lit by the Executive Committee of the National Economic Council (ECNEC) in August 2020 at a cost of $6.8 billion, including a $6 billion Chinese loan. The project, however, was unable to progress due to a disagreement over loan terms and China’s exceptions to the cost.
This time the government has decided to give it another shot and approved a cost of $10 billion, representing a 45 percent increase. The increase has been approved for all three project packages, which are scheduled to be built between 2023 and 2031.