Upgradation of Mainline-1 or ML-1 is a strategic project under CPEC. The consensus on undertaking this project between Pakistan and China was reached at the 2017 Joint Cooperation Committee (JCC). It is considered a priority project as it will benefit both countries.
ML-1 is a railway line project that stretches from Karachi to Peshawar. It covers a total length of 1,872km, passing through the areas of Hyderabad, Rohri, Khanewal, Multan, Lahore and Rawalpindi. Pakistan’s existing railway line was built in the1870s, during the British Raj era. Since then, its infrastructure has become dilapidated. An efficient railway system is a strategic necessity to enhance intra-Pakistan connectivity and improve domestic travel and trade Pakistan’s railway system requires modernisation.
Under CPEC, it was envisaged that existing infrastructure will be revamped and track upgraded. For this, the two countries signed an agreement to undertake a joint feasibility study in 2015. In the first stage, the feasibility study was carried out jointly by China Railway Eryuan Engineering Group Corporation, Ltd (CREEC), NESPAK, and PRACS. This study was completed by 2017 and, in the study, JCC approved upgradation of ML-I as a strategic project under the CPEC framework.
For realising the project, it was decided it will be executed in three phases. Upgradation of ML-I was to be the first phase, followed by ML-Phase II and ML-Phase III. Phase II envisaged extending the railway to Gwadar from Jacobabad via Basima, and Phase III is a long-term project aiming to link border regions of both countries via railway by extending track from Havelian to Khunjerab and onto Kashghar.
For Phase I, the vision is to upgrade and modernise the existing track in two segments i.e. Peshawar-Lahore and Lahore-Karachi. After completion of the project, a train would be able to make a journey from Peshawar to Karachi at the speed of 160km/h, significantly reducing the travel time across the country. In addition to it, as part of the project present signalling system would be modernised to a computerised signalling system; training facilities of Pakistan railways would be upgraded, and new locomotives and rolling stocks would be imported from China. Besides, the human resource of Pakistan railways will be trained in advanced best practices for efficient management of the system and generation of revenue. In essence, it is a project focused on modernising the railways’ track and Pakistan’s railways’ systems and manpower.
A crucial aspect about this project would be the electric traction which would further enhance the speed and efficiency of the traction. Moreover, one obstacle that Pakistan faces is in labour skills, this project not only aims to aid infrastructure but also to ameliorate the training facilities among the labour and management skills from the Chinese. Apart from that the track and stations would be better rebuilt, the predicted life of these tracks is thirty years after which the tracks have to be changed. Furthermore, the commission also discussed the possibilities that a computerised signalling system would bring to the project. It was also argued that new locomotives and rolling stock would be imported from China as a part of their commercial loan.
From then onwards, bilateral talks commenced for an agreement on technical details and financial close. Initially, it was estimated that the project would cost upwards of $8 billion. This would have been a prohibitive undertaking for Pakistan, which had initially granted approval of an eight-year mega project at the projected cost of $7.2 billion. Still, Pakistan sought to bring down the cost. After multi-year of negotiations, both sides finally agreed to $6.8 billion as the cost of the revised project plan. Executive Committee of the National Economic Council approved the ML-I project at the cost of $6.8 billion in August 2020.
As talks between China and Pakistan continued for the finalisation of the financial arrangements, Pakistan expressed a desire for easing financing terms via government concessional loans, as ML-I is a strategic project, beneficial to both sides. China, however, proposed a mix of commercial and concessional loan components, which would enhance the projected cost of the mega-railway project. The interest rates of Chinese-government concessional loans are under 1 percent, while the interest rates of commercial loans are upwards of 2 percent.
Owing to the challenging economic situation, partly due to the impact of the COVID-19 pandemic, Pakistan will find it difficult to make timely payments, if it takes commercial loans for the construction of the ML-I railway mega project. This would lead to unavoidable delays during the construction of the project. Already, the commencement of the project has been delayed for four years now. Fast-track work on addressing all related tasks for implementation of ML-I in a timely manner is in the strategic interest of both countries.
Recently, 10th Joint Cooperation Committee (JCC) meeting of the CPEC was held. Both sides reviewed the present state of talks related to ML-I. Since both sides view ML-I as a strategic project it is prudent that both sides exhibit a degree of flexibility and understanding of the prevailing situation. Both sides have held extensive consultations for finalising the design, construction plan, and feasibility of the project. The only obstacle that needs to be resolved is the signing of the financial contract while both sides have agreed on the cost of the project. A proactive approach is required by both sides to move ahead with the project.
The evolving regional environment also calls for expediting agreement and realization of work on the ML-I project. Pakistan has already proposed extension of ML-I to the Torkham Border and onwards Afghanistan. The Chinese side had agreed to hold technical consultation and feasibility of such an extension. When materialised, it will inevitably enhance connectivity with Afghanistan, Central Asia and directly enhance Pakistan and China’s trade with Iran, Turkey and Central Asia.
–Muhammad Faisal is a Research Fellow and Fatima Shakeel is a research-intern at Institute of Strategic Studies Islamabad