Just hours before dispatching special envoys to Beijing with the energy debt restructuring proposal, Pakistan on Tuesday approved the $3.3 billion worth of first phase of the Mainline-I (ML-I) project.
With the green light to the first phase of the largest China-Pakistan Economic Corridor (CPEC) project costing a total of $6.7 billion, the controversy, triggered by a statement of the planning ministry, over the approval of the ‘strategic’ scheme came to an end.
Headed by Deputy Prime Minister and Foreign Minister Ishaq Dar, the Executive Committee of the National Economic Council (Ecnec) approved the completion of the $6.7 billion project in two phases. It sanctioned the first phase from Karachi to Multan at a cost of $3.32 billion, although the Chinese have so far agreed to fund $1.1 billion worth of Karachi-Hyderabad section.
The government also invited Tariq Bajwa, former special assistant to the prime minister, to attend the Ecnec meeting. He may soon be formally inducted into the government, although he has been advising the government in an informal capacity.
“The up-gradation of Pakistan Railways’ existing Mainline-I was approved with a re-modified scope, with directions that phase-I of the project, ie, 929 km from Karachi to Multan, will be taken up as priority,” said the Ecnec’s decision communicated by the Ministry of Foreign Affairs.
Ecnec approved a total of nine projects having cumulative cost of Rs2.3 trillion. The meeting had been convened to sanction the ML-I project before the departure of Planning Minister Ahsan Iqbal and Finance Minister Muhammad Aurangzeb to China.
The finance minister will take up the issue of Chinese energy debt restructuring during the visit.
It is the second time when Ecnec took up the ML-I project for approval. Earlier, it had deferred the matter due to the reason that the project should be constructed in phases and financing should be secured first.
It was decided that only phase-I would be considered for financing through CPEC. The second phase from Multan to Peshawar will be considered later once the funding is confirmed.
On Saturday, the prime minister instructed that the ML-I project should be split into two phases and presented before Ecnec for approval.
Phase-I is 929km long from Karachi to Multan costing $3.32 billion. Pakistan is trying to secure a $2.8 billion loan from China and it will arrange the remaining $497.3 million from the budget.
The phase-II of the project is 797km long from Multan to Peshawar, which will cost $3.36 billion but it will be taken up after the confirmation of financing – either from CPEC or other sources, according to the decision.
Ishaq Dar has instructed the Railways Division to prepare a new business plan in light of the reduced scope of the project and its impact on finances.
Separately, Ecnec approved the flood response emergency housing project at a cost of Rs123.2 billion. The Asian Development Bank (ADB) and the government will fund the project. The ADB will provide a $400 million loan.
The project is aimed at supporting the flood-stricken people in all districts of Sindh for the reconstruction and repair of their houses. It will support the reconstruction of more than 250,000 multi-hazard resilient houses.
Ecnec approved four water-sector projects including the government of Punjab’s project for the construction of Dadhocha Dam. The project will help bridge water deficiency in Rawalpindi through the supply of 35 MGD of water.
Other water-sector projects included the Gomal Zam Multipurpose Dam, raising of Mangla Dam and Golen Gol hydropower project. All the three projects are now moving towards closure.
Ecnec also approved the construction of a border terminal along the Pakistan-Afghanistan border at Badini worth Rs20.25 billion. The umbrella PC-I of the project envisages the construction, improvement and up-gradation of the border terminal as well as up-gradation of a 40km-long road.
Ecnec approved the construction of Dadhocha Dam worth Rs14.5 billion. The dam site is located near Dadhocha village on the Ling River.
The dam will help bridge water deficiency in the Rawalpindi district. Upon completion, it will provide 35 MGD of raw water to Rawalpindi.
It approved a project for the development of an integrated transit trade management system worth Rs95.4 billion. The ADB will provide a Rs77.2 billion loan and the remaining Rs18.2 billion will be arranged by the federal government.
The project envisages the construction and development of state-of-the-art border crossing points at Torkham, Chaman and Wagah, besides business process improvement and system up-gradation at the main ports of entry.
It approved the Golan Gol hydropower project at a cost of Rs42 billion. The objective is the construction of a 108MW hydropower project with annual energy output of about 476 GWh.
Ecnec approved the Gomal Zam Multipurpose Project worth Rs26 billion. Its main objective is to harness flood water to provide 848 cusecs of water to irrigate 191,139 acres of land including 28,053 acres of additional land, which falls under the Waran Canal System, and to generate 17.4MW of electricity.
It once again cleared the raising of Mangla Dam worth Rs102 billion. The main objective was to raise the Mangla reservoir by 30 feet to regain the lost storage capacity of 2.88 MAF, increase power generation by 11% and mitigate flood losses by reducing flood intensity.
Ecnec approved the Karachi Neighbourhood Improvement Project worth Rs18.8 billion. The project will enhance the accessibility, usability and attractiveness of public spaces like roads, streets, parks and open spaces; and public buildings in selected neighborhoods of Karachi. Secondly, it will improve selected citizen services and municipal financial management capacity.
