Author Topic: Pakistan's stalled China-backed rail project prompts turn to Japan  (Read 1816 times)


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Pakistan's stalled China-backed rail project prompts turn to Japan
Regional leaders show 'buyer's remorse' over cost of Belt and Road loans

ADNAN AAMIR, Contributing writer
OCTOBER 19, 2019 17:14 JST

KARACHI -- A regional government in Pakistan says it is open to funding from Japan for an urban railway after funding for the project under the China-Pakistan Economic Corridor, or CPEC, hit a snag.

On Tuesday, Skindar Sultan Raja, head of Pakistan's state-owned railway operator, told the Senate Standing Committee on Railways that the regional government of Sindh is willing to take a loan of $2.6 billion from the Japan International Cooperation Agency, JICA, to refurbish the Karachi Circular Railway, or KCR.

Frustrated by a lack of support from China for the project, Sindh officials are looking to Japan. If the JICA loan comes through, it would be the first case where a Japanese entity takes over the funding of a China-Pakistan Economic Corridor project. This could strengthen the impression that CPEC is being scaled back. Experts believe it is beginning to dawn on Pakistani leaders that the much ballyhooed corridor may bring fewer benefits than expected.

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But the Karachi railway project stalled at the next step, where the Sindh government and the Chinese companies involved in the project were supposed to sign off on specific terms. This means the railway is not yet officially executed as part of the key railway project in the Pakistani portion of the Belt and Road Initiative. The Belt and Road is Beijing's vast building program that aims to connect China to Central Asia and Europe.

The 43 km Karachi railway is expected to carry 700,000 passengers a day when operational. Given its importance to the city, the chief minister of Sindh, Murad Ali Shah, repeatedly asked for the project to be funded under the China Pakistan Economic Corridor.

Because the Sindh government does not have the money to begin the project on its own, it has been looking for outside funding, and CPEC was seen as the best available choice. From 2015 to 2018, the corridor important to regional governments as source of easy funding for large projects. Now that the central government's enthusiasm for the corridor appears to be cooled, regional governments are also looking for other external donors.

In September, Shah asked the Chinese consul general in Karachi, Wang Yu, to expedite funding for the railway as part of the corridor, and sought Yu's help in persuading Beijing to help make the Karachi loop line a reality.

But they made little headway, so Sindh officials turned again to JICA for funding. Experts believe the main reason they are looking to Japan is the low cost of its loans. While it is unclear how much Chinese loans under the corridor will cost, Pakistan Railways' Raja confirmed to the Senate committee that JICA's loan terms are more favorable than China's.

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