ADB to Finance Pakistan Railway Upgrade, Replacing China

The Asian Development Bank (ADB) is set to finance upgrades to a portion of Pakistan’s aging railway infrastructure, stepping in after significant delays in securing funds from China threatened a crucial mining endeavor, according to sources.

The extensive refurbishment of 1,800 km of railway lines has been a key component of a $60 billion Chinese investment initiative in Pakistan, unveiled in 2015 as part of Beijing’s Belt and Road Initiative.

However, a decade of discussions has yet to yield a financing agreement for the railway upgrades, the largest individual project under the Chinese program. Pakistan is also facing challenges in repaying existing Chinese debts for other ventures.

The ADB is reportedly in advanced discussions to spearhead the financing of a $2 billion upgrade to a 500-km section of the railway connecting Karachi and Rohri in southern Pakistan. This segment was originally part of the Chinese project, sources familiar with the matter told Reuters.

Sources indicated that the upgrade is now critical for transporting copper ore from the Reko Diq mine, which is currently under development by Canada’s Barrick Mining Corp.

One senior government official stated, “We will face a crisis. How will you transport output from Reko Diq? The already strained line will be under even greater pressure.”

Neither Pakistan’s railways ministry nor China’s foreign ministry offered immediate comments.

The ADB refrained from confirming the financing arrangement but acknowledged regular discussions with the Pakistani government regarding railway sector development.

In a statement, the ADB noted that any potential assistance would undergo thorough due diligence and consideration under ADB’s policies before any commitments are finalized.

The agreement, potentially announced later this month, would involve the ADB leading a consortium to finance the project and engaging an international engineering firm through a competitive bidding process, sources mentioned.

Earlier in the week, the ADB announced $410 million in funding for the Reko Diq mine. The ADB president is scheduled to visit Islamabad soon, according to sources.

The sources emphasized that this plan requires diplomatic finesse but has been coordinated with China.

The senior Pakistani official affirmed, “We would never take actions that endanger this relationship.”

Following the launch of the China-Pakistan Economic Corridor in 2015, China initiated significant power and infrastructure projects. However, progress has slowed, with the Gwadar East Bay Expressway, inaugurated in 2022, being the most recent major undertaking.