In a major shift for Pakistan’s flagship infrastructure initiative, the China-Pakistan Economic Corridor (CPEC), Islamabad has approached the Asian Development Bank (ADB) for a $2 billion loan to upgrade the Karachi-Rohri section of the Main Line-1 (ML-1) railway. The move comes after China pulled back from financing the project, citing payment delays and mounting security risks.
The 480-kilometer Karachi-Rohri stretch forms a critical part of the $6.7 billion ML-1 railway modernization plan, which spans 1,726 kilometers from Karachi to Peshawar. Considered the backbone of CPEC — the $50 billion Pakistan leg of Beijing’s Belt and Road Initiative (BRI) — the project is central to Pakistan’s transport and trade connectivity.
According to officials, an ADB inspection team visited the project site in July and has agreed in principle to extend financing. If finalized, it would mark the first time a core CPEC project is funded by a multilateral agency rather than China. However, the terms are expected to involve higher, market-based interest rates compared to Beijing’s previous concessional lending.
China’s caution represents a departure from its earlier approach. During his August 21 visit to Islamabad, Chinese Foreign Minister Wang Yi encouraged third-party involvement in CPEC projects, a contrast from Beijing’s longstanding insistence on being the exclusive financier of ML-1. Pakistan itself had rejected an ADB offer back in 2017, aligning with China’s position at the time.
Beijing’s retreat stems from multiple concerns. Pakistan currently owes around $1.5 billion to Chinese power producers, while repeated attacks since 2021 — killing at least 21 Chinese nationals — have raised security anxieties. Cost escalations also undermined confidence: the project was initially pegged at $6.8 billion, revised to $9.85 billion in 2022, and later trimmed back to $6.7 billion.
“China realized the returns were uncertain, and Pakistan’s payment issues made the risks higher,” said Haroon Sharif, chairman of the Pakistan Regional Economic Forum. Analysts suggest Beijing now prefers Pakistan to lean on global lenders like the ADB or IMF, limiting its own financial exposure.
With ADB’s involvement, the project is expected to follow stricter procurement rules and competitive bidding — a sharp break from earlier CPEC ventures largely awarded through government-to-government agreements. Experts believe this could reshape the financing model of large-scale infrastructure projects in Pakistan.
While China’s reduced role in ML-1 has prompted speculation about a recalibration of its Pakistan strategy, analysts maintain bilateral ties remain strategically strong. “ML-1 alone won’t alter the fundamentals of China-Pakistan relations,” said Muhammad Shoaib of George Mason University.
