New Central Asia-Pakistan rail plan faces funding, security issues

ISLAMABAD — Uzbekistan, Afghanistan and Pakistan signed a framework agreement last week to build a railway line connecting landlocked Central Asia to Pakistani seaports, although analysts say the financing of the project remains unclear.

The governments signed the plan for a feasibility study on July 17 to build the so-called UAP Railway Corridor that will extend an existing link between Termez in Uzbekistan and Naibabad in Afghanistan to Kurram district in northwest Pakistan. From there, a 192-kilometer railway track will be built by Pakistan to connect with the local railway system which runs to Karachi port in the south.

The Uzbek Transport Ministry estimated that the project will cost $6.9 billion and that the railway would have the capacity to transport at least 21 million tons of cargo annually from 2030. Construction is expected to begin this year.

“The railway project will cut transport costs between Pakistan and Central Asia by 40% and will help in regional economic integration of Pakistan with Central Asian republics,” a Pakistani official told Nikkei Asia on condition of anonymity. “This project will also connect Central Asian with Pakistani ports in the Arabian Sea, which will help Pakistan earn a lot of revenue from the transport of cargo alone.”

Tayyab Safdar, global security and justice track director at the University of Virginia, said the rail link has long been an ambition of Pakistan’s, adding, “This is something they have been trying to do at least since the 1990s.”

However, the project comes with considerable challenges for the South Asian country.

Domestic operator Pakistan Railways has struggled with operational and financial problems, with an official telling a senate standing committee on July 21 that the department only operates 104 trains now, down from 244 at one point.

Officials from the three countries signed a trilateral framework agreement for the rail link on July 17. (Screenshot from Bakhtiyor Saidov’s X)

Muhammad Shoaib, a postdoctoral fellow at George Mason University in the U.S., said the lack of infrastructure to facilitate construction and security issues are also challenges that the countries could struggle to overcome. “Pakistan’s existing sufferings in the railway sector and the signing of this agreement suggest a lack of homework on its part,” he said.

Safdar pointed to the mountains in Afghanistan and Pakistan, saying that the costs of building roads and facilities over such terrain will be substantial. “Security will be a big challenge given that the proposed [railway] line will cross Afghanistan,” he said. “How will the Afghans deal with the challenge?”

The analysts also raised questions about the financing of the project. China has been an investor in the region as part of its Belt and Road Initiative, which some have suggested makes Beijing an obvious funder for this new project.

China had already agreed to finance a $6.7 billion upgrade of Pakistan’s Karachi-Peshawar rail artery that involves track doubling, advanced signaling, and the provision of higher-speed trains as part of the buildout of the China-Pakistan Economic Corridor, a BRI component.

However, that project has been delayed for years as Beijing pulled funding because of the security situation and economic crunch in Pakistan. Anti-China sentiment has been on the rise in the Balochistan area and workers have been attacked by the Balochistan Liberation Army, a separatist group.

Given that situation, analysts have said that it would be a challenge for the three UAP partners to convince Beijing to provide funds. But a Pakistani government official said that it was too early to talk about financing at this stage.

“The total cost of the [UAP] project, along with preferential mode of financing, will be decided once the feasibility study of the project is completed,” Babar Ali Raza, a spokesperson for state-owned operator Pakistan Railways, told Nikkei. “The total duration for completing the feasibility study for this project is six months. Pakistan and Uzbekistan have committed $5 million each for the study.”

The article appeared in asia.nikkei