ML-1 railway project cost may hike beyond Rs1,543 bn

ISLAMABAD: With completion of 90 percent designing work for much-awaited Mainline-1 under CPEC, the government has asked Ministry of Railways to update the PC-1 for re-submission before Planning Commission with expectation that its cost would go up beyond $10 billion (Rs1,543).

Although, coronavirus had negatively impacted Chinese economy but Pakistani authorities seemed confident that the multibillion project of ML-1 would be on ground from next fiscal year 2020-21 in July after completion of all procedural/approval requirements before June 2020.

Top official sources confirmed to The News on Tuesday that the Ministry of Railways was given deadline for end of ongoing month for submission of updated PC-1 of ML-1 as it was told during one of top level meeting held under Minister for Planning Asad Umar in second week of February 2020 that the concerned ministry completed over 90 percent designing work of the project.

Now the Ministry of Railways has been assigned to align the cost along with designing of the project and its cost would go up beyond $10 billion at all cost against earlier estimates of $9.2 billion. Under ML-1, the rail line from Peshawar to Karachi will be modernised after which the speed of train will be increased up to 160km per hour from existing level of 60/80km per hour.

“The biggest question arises before the policy makers that who will run the modernised railways after the completion of ML-1” said one top official and one of the proposal under consideration was to handover railways to Chinese for period of three to five years because the existing workforce of Pakistan Railways would not be able to run the modernised rail that would be run through computerised technology. “The Pakistan Railways will require professionals having MBAs degrees, economists and experts having expertise in logistics and other areas so existing workforce will not be able to deliver” said the official sources.

The working of the government showed that the PC-1 was presented before the Planning Commission on October 24, 2019 when designing work was completed just 60 percent but now they had accomplished over 90 percent work so the Ministry of Railways was asked to come up with updated PC-1 including revising its cost.

Prime Minister Imran Khan also established financing committee under leadership of Deputy Chairman Planning Commission Mohammad Jehanzeb Khan and so far three meetings were held to finalise modalities for financing of ML-1.

Federal Minister for Planning Asad Umar also instructed the financing committee to hold negotiations with Chinese side for obtaining favourable terms and conditions for loan in order to construct ML-1 project.

Pakistan would have to take final decision related to O&M (Operation & Management) after completion of ML-1, because the existing workforce of Pakistan Railways could not tackle modernised rail.

There is one proposal to build capacity of Project Management Unit (PMU) in next five years and then the O&M would be handed over to PMU of Pakistan Railways. The official sources said that it would be premature to say anything with sure because it will be part of upcoming negotiations on how O&M of modernised railways after completion of ML-1 would be undertaken.

On the occasion of last 9th joint cooperation committee (JCC) between Pakistan and China under CPEC framework in November last, both the countries expressed satisfaction with the progress of ML-1 project. The Pakistani side informed that the umbrella PC-1 of the project has been submitted to the Planning Commission and will be approved expeditiously. It was further added that bidding documents are under process and will be finalised.

The Pakistani side proposed that the project financing may be considered through RMB. The JCC expressed satisfaction with the completion of the review of the Preliminary Design Phase-I for ML-1 and agreed to expedite the preliminary design and review of the remaining sub projects. Both sides agreed that the Pakistani side shall complete the project approval process (PC-1), formulate the bidding documents.

To facilitate ML-1 financing, Pakistani side has established ML-1 Inter-Departmental Financing Committee. The Chinese side agreed to constitute a high-level financing committee for financing negotiation in the near future. It was also agreed that RMB financing for the project shall be considered.