KARACHI:
Pakistan Railways, once considered the backbone of national connectivity, is undergoing a critical transformation with the help of the Asian Development Bank (ADB). After years of underinvestment and safety issues, Pakistan is seeking a $2 billion funding package from the ADB to modernize its railway infrastructure, particularly the Main Line-1 (ML-1) route, connecting Karachi to Peshawar.
A Fresh Start for Pakistan’s Railway Sector
Pakistan Railways has struggled due to outdated tracks, obsolete signaling systems, and the decline in freight revenues. This has led to a shift in logistics, pushing trade onto highways, increasing costs, and reducing Pakistan’s competitiveness in global markets. The situation has also worsened with safety concerns like derailments, reducing public confidence in the service.
The Impact of ADB’s Intervention
The ADB’s intervention represents a much-needed financial boost at a time when Pakistan is facing increasing fiscal pressure. This investment is expected to rejuvenate the railway sector, focusing on three key areas:
1. Rehabilitation of ML-1 – Enhancing safety and speed for passenger travel.
2. Development of a Dedicated Freight Corridor – Alleviating pressure on highways and facilitating smoother trade.
3. Introduction of Digital Systems – Ensuring better monitoring and security of railway operations.
If successful, these upgrades will allow passenger trains to run at speeds of up to 160 km/h, halving travel times on key routes and reigniting rail-based logistics for the textile and agricultural sectors.
Boosting Export Competitiveness and Economic Growth
Pakistan’s textile industry, which accounts for nearly 60% of exports, stands to gain from this railway revival. With more efficient transport, exporters will be able to reduce delays and shipping costs, enhancing Pakistan’s role as a trade corridor between South and Central Asia. The modernization of the railway system will also help Pakistan reduce logistics costs, which are currently 35% higher than the regional average.
Moreover, this infrastructure development will have a multiplier effect on the economy, generating thousands of construction jobs and stimulating industries like steel and cement. A stronger railway system will also reduce the environmental toll of trucking, cutting fuel consumption and emissions.
ADB’s Role in Pakistan’s Infrastructure Future
ADB’s support provides Pakistan with an alternative to traditional financing sources like China. The development of a more diversified financing base reduces over-reliance on any single lender, allowing the country to mitigate risks associated with international economic fluctuations. Although China has invested over $25 billion in Pakistan in recent years, its financing has slowed due to Pakistan’s fiscal challenges and shifting priorities in Beijing’s economic strategy.
Learning from Regional Success Stories
Countries like Bangladesh and India have successfully used ADB financing to modernize their rail systems. The successful outcomes in these nations provide valuable lessons for Pakistan, emphasizing the importance of political stability and reform. Pakistan’s railways have lagged behind partly due to political instability and resistance to necessary reforms.
The Path Forward
For Pakistan’s railway sector to experience a true turnaround, ADB’s financial support must be coupled with governance reforms, enhanced transparency, and private sector participation. Experts argue that without such reforms, financial investments alone may not lead to the desired transformation.
Conclusion
The ADB’s $2 billion investment could be the turning point for Pakistan Railways, enabling faster, safer travel and revitalizing the logistics sector. This modernized infrastructure is expected to enhance Pakistan’s economic position regionally and globally, helping reduce costs, increase export competitiveness, and create new jobs in the process.h
