$390m Reko Diq bridge loan for ML-3

• 996-km project will upgrade Rohri-Sibi-Quetta-Koh-i-Taftan rail line to support transportation from Reko Diq copper and gold project • Officials say upgraded corridor will boost mineral exports, strengthen regional connectivity with Iran and Turkiye, improve access to Gwadar Port ISLAMABAD: Owing to financial constraints, Pakistan Railways’ 996-kilometre Main Line-3 (ML-3) project covering the Rohri-Sibi-Quetta-Koh-i-Taftan section, estimated to cost about Rs280 billion, will be financed through a special $390 million (over Rs112bn) bridge loan from Reko Diq Mining Company (RDMC), repayable in a lump-sum (bullet) payment within two years. The financing arrangement, its foreign exchange exposure, and the project’s security costs — estimated at around Rs46. 38bn, or nearly 17 per cent of the total cost — have come under scrutiny by the Planning Commission. The commission has also raised concerns over inadequate planning for post-completion security. The $892 million ML-3 upgrade is primarily intended to support transportation linked to the multi-billion-dollar Reko Diq copper and gold project. RDMC is a joint venture in which Canada’s Barrick Gold Corporation holds a 50pc stake, while the remaining 50pc is equally owned by the Balochistan government and three federal state-owned entities — OGDCL, PPL and GHPL. Sources told Dawn that while clearing the project for consideration by the Executive Committee of the National Economic Council (Ecnec), the Central Development Working Party (CDWP), chaired by Planning Minister Ahsan Iqbal, directed the Ministry of Railways to address several concerns before formal approval. The prime minister has already approved the $390 million bridge financing from RDMC, while the Economic Coordination Committee (ECC) of the cabinet has also approved the related rail development and financing agreements. However, only Rs250 million has been allocated for the project in the FY2026-27 Public Sector Development Programme (PSDP). The Planning Commission observed that the bridge financing arrangement, which requires the federal government to repay RDMC in full by June 2028, could create significant fiscal pressure and repayment risks. According to Pakistan Railways, the Rs278. 62 billion project will ultimately be financed through the PSDP, with interim funding provided through RDMC and the federal government. The project includes track renewal, rehabilitation of embankments and bridges, replacement of turnouts, and construction of 11 new railway stations between Spezand and Taftan. Implementation has been divided into two phases. Phase-I (2026-2030), estimated at $585 million, will focus on critical infrastructure works, while the remaining priority works will be completed during Phase-II (2031-2033) at an estimated cost of $145 million. Security arrangements during construction alone are expected to cost about $162 million. Project implementation has already begun. A joint venture led by M/s Zeeruk International has been appointed as consultant, while RDMC has agreed to assist Pakistan Railways in procuring critical machinery, equipment and other long-lead items. Officials said the rehabilitation of the Rohri-Sibi and Quetta-Taftan sections has become essential due to the expected increase in mining activity around Reko Diq. The existing road network is considered incapable of handling the large-scale transportation requirements of the mining project. The current ML-3 infrastructure is in poor condition, with tracks having long exceeded their useful life. Trains currently operate at restricted speeds of only 10-15 kilometres per hour. The route is also strategically important for regional connectivity, linking Pakistan with Iran and Turkiye, and providing access to markets in Europe and Central Asia. Officials said the project would generate substantial economic and social benefits by improving mineral exports, creating jobs and strengthening regional trade. Passenger traffic on the Quetta-Taftan section has virtually ceased because of the deteriorated track condition and safety concerns. The few trains that still operate take nearly 48 hours to complete the journey, compared with about 15 hours by road. Currently, only one or two freight trains operate each month between Quetta and Taftan. Following rehabilitation and the commencement of Reko Diq operations, freight traffic is expected to increase to eight train sets per month, with additional services connecting Iran and other regional destinations. Officials also said that linking Nokundi with Gwadar Port would provide a shorter export route for minerals. The current line capacity of only two train pairs between Quetta and Taftan is projected to increase to 26 trains, while operating speeds are expected to rise to 100 kilometres per hour, enabling efficient transportation of Reko Diq’s mineral output to Karachi for export. The Planning Commission also questioned the project’s financial phasing, noting that only Rs25. 87 billion — about 9pc of the total project cost — had been earmarked for the first year of implementation (FY2026-27), despite the project’s seven-year execution period. “If funding cannot be arranged in time, the project will be delayed, resulting in substantial cost escalation, as witnessed in previous railway projects, ” the commission observed. The commission also questioned the inclusion of Rs46. 38 billion in security costs within the project’s development budget. “Provision of security is not a development activity; however, it has been included in the project cost, ” it noted, asking whether the provincial government had been consulted about providing security through local police. It further observed that the security allocation, accounting for about 17pc of the total project cost, was unusually high and could undermine the project’s financial viability. The commission also sought clarification on how security along the entire railway corridor would be maintained after project completion, particularly in light of recent terrorist attacks and security incidents on sections of the ML-3 route. Published in Dawn, June 29th, 2026

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