Pakistan and China have decided against proceeding with a lump sum $6.8 billion financing agreement for the Karachi-Peshawar Railway (ML-1) Project, opting instead for a phased financing approach, according to sources.
The project will be divided into two separate contracts for phased construction. Phase I, with a financing package of $3.2 billion, is set to be finalized next month. This phase will focus on constructing railway lines from Karachi to Hyderabad and Hyderabad to Multan. The second phase, which will cover the Multan to Peshawar section, will commence after a feasibility study is completed following the successful completion of Phase I.
Sources added that that the financing terms for Phase I will involve long-term loans from China, with Pakistan advocating for a low interest rate. Initially, both countries had discussed a comprehensive $6.8 billion financing agreement, but a consensus was not reached, leading to the decision to adopt a phased contract approach.
Phase I will be executed in two steps: the first package will cover the Karachi-Hyderabad line, while the second package will address the Hyderabad-Multan line.
