ADB and World Bank circle the $6.8bn ML-1 after China walked away from funding

The Asian Development Bank is lining up to lead financing for ML-1, the 1,800km Karachi to Peshawar railway rebuild, with the Asian Infrastructure Investment Bank and the World Bank as co-financiers, a National Assembly panel was told.

The project is now costed at $6.8 billion, revised down from the $9 billion figure carried for years. Construction is put at roughly three years.

The European Investment Bank, the Islamic Development Bank and the Japan International Cooperation Agency have also shown interest.

Why the lenders changed

ML-1 was the flagship rail component of CPEC and was to be financed by China. After the withdrawal of Chinese financing, the government went looking for alternatives, which is how a project written as a bilateral Chinese loan ended up on a multilateral term sheet. Multilateral money is cheaper but slower, and it comes with procurement rules and safeguard conditions that bilateral loans do not carry.

The speed question

The track is being designed for 160km/h, but the operational speed envisaged is 120km/h. The National Assembly panel pushed back, recommending that the infrastructure be aligned to actually run at 160km/h where that is technically and economically feasible, and that the project take full advantage of modern railway technology and international standards.

Today a Karachi to Lahore passenger service averages well under 70km/h once stops and speed restrictions are counted. Going to 120km/h would roughly halve the journey. That is the difference between the train being a budget option and being a real competitor to a domestic flight.

What else the panel heard

The project is not only civil works. It bundles institutional and operational reform of Pakistan Railways: efficiency, sustainability and service delivery. Pakistan Railways has run an operating deficit for decades, so the reform half is the part that decides whether the $6.8 billion buys a working railway or a new track under the same balance sheet.

The same panel was told that Karachi's K-IV water project is expected to be completed by April 2029, against a city requirement of more than 1,200 million gallons a day.

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