THE Pakistani government’s Economic Coordination Committee (ECC), chaired by finance minister, Muhammad Aurangzeb, approved a $US 390m bridging loan on September 18 for construction of a new 1350km freight line.
The rail link will be used to transport ore concentrate from mines at Balochistan in western Pakistan to Port Qasim on the Arabian Sea in the south of the country for export. The agreement, according to local news outlet Dawn, is classified as a “qualified investment” under the Foreign Investment (Promotion and Protection) Act 2022 and has been signed with Reko Diq Mining Company (RDMC).
On the same date RDMC secured a funding deal for the first phase of the $US 7.72bn Reko Diq Copper-Gold Project, which will become the country’s largest mining venture when it becomes operational in 2028.
The new line has been described as crucial for the project’s commercial viability, resulting in the government agreeing a three-year bridging loan at a secured overnight financing rate of +250bps, repayable in a single payment at maturity.
The route to Port Qasim includes use of the existing ML-1 and ML-3 main lines. However, the Nokundi - Rohri section of ML-3 requires urgent upgrades to handle projected freight volumes. The Ministry of Railways (MoR) has therefore been directed to appraise potential financing agreements for this work and report back to ECC by March 2026.
ML-1 financing
The loan for the new ore line was agreed days after Pakistan and China finalised funding on September 14 for the $US 7bn required for a major upgrade of ML-1, involving track doubling and structure renewals on 1726km of railway.
China was originally expected to finance the project, but subsequently declined to provide the full amount. As a result, a new financing consortium has been established, with the Asian Development Bank (ADB), which will provide €2bn in loans, and the Asian Infrastructure Investment Bank (AIIB), contributing alongside Chinese financial institutions.
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