Pakistan delays $6.7B CPEC project approval

Pakistan has decided to delay the approval of the $6.7 billion Mainline-I (ML-I) project under the China-Pakistan Economic Corridor (CPEC) due to concerns over its altered scope and design. The Central Development Working Party (CDWP) raised objections during a recent meeting, citing issues with the project's design, scope, and financial model.

China had requested a reduction in the project cost to $6.7 billion, leading to changes that have impacted the project's feasibility. Modifications such as lowering the speed limit, reducing train frequency, and excluding rolling stock have significantly changed the project's original concept.

The Planning Commission has called for a review to assess the project's viability at the revised speed of 120 kilometers per hour and requested a revalidation of the business plan. The Ministry of Finance's capacity to provide sovereign guarantees for a $5.8 billion Chinese loan is also being scrutinized.

The ML-I project, essential for the CPEC, aims to upgrade the existing railway track to improve safety and efficiency. However, delays and technical alterations, including reduced speeds and modified specifications, have raised concerns about operational safety.

China has urged Pakistan to approve the revised project before discussing loan terms. The project's cost has fluctuated between $6.8 billion and $9.9 billion, with proposed financing under the CPEC framework agreement. The implementation is now planned in two phases over nine years, focusing on rehabilitating a 1,726km track.

Furthermore, the CDWP has recommended three projects worth Rs126 billion for approval, including road improvements and a health initiative. The phased implementation agreement between China and Pakistan for the ML-I project aims to address the revised scope and cost challenges.

The postponement of the ML-I project approval highlights the complexities involved in large-scale infrastructure projects and the importance of thorough planning and evaluation. As Pakistan and China navigate through these challenges, ensuring the project's viability and alignment with both countries' interests will be crucial for the success of the CPEC and the broader economic cooperation between the two nations.