| Pakistan | Jan 20, 2020
Fueled by Chinese money, trains in Pakistan will hopefully gather speed soon, but there may be other obstacles ahead.
Trains in Pakistan are important. In large and populous countries such as Pakistan, the movement of goods and people is not a simple matter, especially given the rough terrain and the aging infrastructure.
Elaborately decorated buses and trucks, well past their prime, have been making their way on deteriorating roads across Pakistan for years.
Allama Iqbal Express, for example, has been slowly snaking its way between Karachi and Lahore in over 24 hours since the 1940s.
The time is ripe for an overhaul of Pakistan’s transportation infrastructure, if the country is to establish itself as a rising Asian economic power in the 2020s. The currently less-than-ideal infrastructure is a major bottleneck for the Pakistani economy.
And, the government has realized as much.
While inaugurating a train station in Khyber Pakhtunkhwa on January 10, 2020, the Pakistani prime minister, Imran Khan, promised upgrades and reforms in the transportation system to benefit the “common man.”
A thorough overhaul of the infrastructure, however, requires funding, and lots of it!
Lack of finance has been slowing down or even halting Pakistan’s efforts to renovate its network of highways and railroads since the 1990s.
China, the second largest economy is the world, is willing to invest in Pakistan’s transportation sector within the framework of the China-Pakistan Economic Corridor (CPEC), though there are misgivings about China’s intentions and doubts about Pakistan’s ability to ever repay the loans.
For better or for worse, however, a good chunk of transportation projects in Pakistan are currently funded by China.
Chinese finance has turbocharged the progress of roadway megaprojects in the eastern provinces of Sindh and Punjab, which were first started in the early 1990s. The final bill for the flagship M5 motorway project exceeds USD3 billion, and over 90% of the financing has been carried out by Chinese state banks.
Linking Multan (in Punjab) to Sukkar (in Sindh), some 392km away, the M5 was opened to traffic in November 2019, considerably raising the level of connectivity between Peshawar, Islamabad, and Lahore, in the north, and Karachi and Hyderabad, in the south—all major economic powerhouses.
The China State Construction Engineering Corporation executed the project in around three years—much shorter than what is common for a project of such caliber in the developing world.
Though more motorway projects are under consideration, the Chinese side showed little willingness to pump more cash into new projects in the last meeting of the CPEC’s joint cooperation committee (JCC) in November, 2019.
Malik Siraj Akbar, a US-based business analyst told the Nikkei Asian Review after the meeting that China is taking a more cautious approach “to make sure all the ongoing projects are completed on time without throwing more money toward Pakistan.”
The initial skepticism in Pakistan has now turned into doubts on the part of China. The loans are not due for at least a decade, and Pakistan’s public debt reached the alarming level of 86.5% of the GDP in 2019.
But it is expected that Beijing and Islamabad will not stop their tango in the foreseeable future, as it is already too late for both sides to back out.
In the last JCC meeting, both sides agreed to explore the financing of the Karachi-Lahore-Peshawar railway (ML-1)—a megaproject of strategic importance and high priority for Pakistan.
The ML-1 enterprise includes the expansion and renovation of the tracks, and its price tag will even dwarf that of the M5 motorway project. The Chinese financiers will pour around USD9 billion into the project to lay over 1,870km of tracks, more than doubling the railway capacity between Karachi and Peshawar.
The ML-1 is simply the most critical link in Pakistan’s entire transportation system, as it carries over three-fourths of the country’s cargo and passenger traffic each year. The proposed overhaul will increase the speed of passenger trains from 65 km/h to 160 km/h, significantly shortening the epic journey between Karachi and Peshawar.
Though there are other projects on the table, including the capacity development of Pakistan’s railway fleet and several urban mass transit projects, none is even comparable to the ML-1 megaproject in terms of the required financing, and ML-1 is bound to be the main talking point in the next round of meetings.
The 10th meeting of the JCC will happen sometime in 2020, where Pakistan will, quite probably, ask for more lenient conditions about the financing of ML-1.