ADB Steps In as Pakistan Turns Away from Delayed Chinese Rail Financing

The Asian Development Bank (ADB) is preparing to finance a major railway upgrade in Pakistan, stepping in as delays in Chinese funding threaten to derail a critical infrastructure project linked to the country’s copper mining ambitions. This pivot marks a significant shift in Pakistan’s decade-long reliance on Chinese investment under the Belt and Road Initiative (BRI).

 

Belt and Road Delays Put Pressure on Strategic Projects

 

At the heart of the issue is an 1,800-kilometer railway modernization plan, once a flagship project within the $60 billion China-Pakistan Economic Corridor (CPEC), announced in 2015. Despite a decade of negotiations, a financing agreement for the project has yet to be finalized with Beijing. Meanwhile, Pakistan is grappling with mounting repayment obligations tied to other Chinese-funded infrastructure and energy developments.

 

The delays have placed unexpected strain on plans to extract and export copper from the Reko Diq mine in Balochistan, being developed by Canadian firm Barrick Gold. According to sources familiar with the matter, the aging rail line is already operating at capacity and cannot support the anticipated demand from the mine without urgent upgrades.

 

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ADB Poised to Lead $2 Billion Karachi–Rohri Rail Upgrade

 

In response, the ADB is now in advanced discussions to lead a $2 billion financing package for a 500-kilometer section of the railway between Karachi and Rohri in southern Pakistan. This stretch was previously included in China’s rail investment portfolio. The updated plan includes mobilizing an international consortium and selecting an engineering contractor through competitive bidding.

 

A senior Pakistani government official warned of potential economic disruption if upgrades are not carried out soon, stating, “We will have a crisis. How will you evacuate output from Reko Diq? The exhausted line will come under even more pressure.”

 

Strategic Diplomacy Amid a Shift in Partners

 

While the ADB has not formally confirmed the financing, it acknowledged that discussions on railway sector development are ongoing. It emphasized that any assistance would be subject to due diligence under ADB’s standard policies. The deal is expected to be officially announced later this month, coinciding with a planned visit by ADB President Masatsugu Asakawa to Islamabad.

 

The timing of this shift is sensitive. China and Pakistan have long referred to their alliance as an “ironclad friendship,” and both countries have invested heavily in CPEC. However, the pace of new projects has slowed. The most recent major development under CPEC, the Gwadar East Bay Expressway, was inaugurated in 2022. Since then, progress has largely stalled.

 

A senior Pakistani official emphasized that the government is treading carefully to maintain diplomatic balance, stating, “We would never do anything to jeopardise that relationship.” Behind the scenes, Pakistani authorities are believed to have informed Beijing of the shift in financing.

 

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Rising Debt, Missed Payments, and New Risks

 

Pakistan’s pivot toward the ADB comes amid rising financial pressure. The government has fallen behind on payments to Chinese power producers operating within the country. This has led to negotiations over rescheduling debt repayments, following a government-commissioned review of the cost structures behind these plants.

 

Earlier this week, the ADB also announced a separate $410 million financing commitment directly for the Reko Diq project, underscoring its growing role in supporting Pakistan’s infrastructure and resource development.

 

As Islamabad recalibrates its economic partnerships, the ADB’s engagement may offer a more transparent and multilateral approach to financing — but it also highlights growing cracks in the Belt and Road’s momentum in Pakistan.

 

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