Pakistan has approached Gulf countries for a $2 billion investment to construct a critical railway connection between Chagai and Gwadar, government sources confirmed. The proposed rail link is considered vital for transporting minerals from the Reko Diq mining project to Gwadar port for international export.
According to officials familiar with the matter, the project will require building an entirely new railway line rather than upgrading existing infrastructure. A comprehensive feasibility study has already been completed through collaborative efforts between the Ministry of Finance, Ministry of Railways, and the Special Investment Facilitation Council (SIFC).
The investment discussions face a significant hurdle, however, as Gulf investors have requested sovereign guarantees to protect their capital—a condition that has met resistance from Pakistan’s finance ministry. Officials cited the country’s ongoing IMF program as a limiting factor in providing such guarantees.
“While we’re eager to secure this investment, our commitments under the current IMF arrangement restrict our ability to offer sovereign guarantees for all projects,” a senior finance ministry official explained.
During recent meetings with the visiting IMF delegation, SIFC representatives emphasized their role as a facilitator between international investors and the government. The IMF team, however, has reportedly cautioned against offering tax exemptions to foreign investments channeled through the SIFC framework.
To address these challenges, the Ministry of Finance and Ministry of Law have initiated discussions on potential amendments to the Sovereign Wealth Fund structure, which could create alternative mechanisms for providing investor confidence without violating IMF conditions.
The railway project represents a strategic infrastructure development that would significantly enhance Pakistan’s mineral export capabilities while strengthening the economic corridor between the resource-rich Balochistan region and the Arabian Sea.
Government officials remain optimistic that a compromise can be reached that satisfies both investor requirements and Pakistan’s international financial obligations.
