KARACHI – The $1.58 billion Karachi Circular Railway (KCR) project might be cancelled as the government is not taking any interest in solving various related issues for the past one year, sources have claimed. One such issue that needs to be handled immediately is the re-lending of funds by the Japanese government.
The government of Japan would invest $1.58 billion for reviving the KCR to mitigate the traffic problems in the city. These funds would be directly provided to the government of Pakistan and the Karachi Urban Transport Corporation (KUTC) would receive them for implementation of the project. However, this is an unfeasible procedure for releasing funds.
There would be a drastic cut of five percent risk rate and 12 percent interest rate, making the total deduction of 17 percent. Despite the importance of the issue, which needs to be addressed by a meeting of the authorities concerned, nothing has been done by the government for the past one year.
The re-lending issue was raised in a meeting held on December 18, 2009 at the Economic Affairs Division in Islamabad where the participants had decided that the foreign funds to be received by the Centre could be used through the Pakistan Railways to avoid reduction on different heads, and the ministry could later release the funds to the KUTC.
However, after the meeting whose members had emphasised holding another sitting, including all relevant organisations and ministries, to settle the issue, nothing has been done by the government in this regard for over a year. In a recent report sent to the Sindh government, the Karachi Mass Transit Cell of the City District Government Karachi, a member of the KUTC Board, has asked the government to take up the issue with the federal government since under the current situation, the project might be cancelled.
Interestingly, the KUTC never addressed this issue during the time the project was under several studies in the last few years. Besides the re-lending issue, the report has also mentioned other issues of the project, including transfer of land for the project and for resettlement of thousands of people displaced due to the project by the Federal Board of Revenue (FBR).
Though the dispute between the Pakistan Railways and the Malir Development Authority has been amicably resolved outside the court for rehabilitation of the people displaced by the KCR project in Juma Goth, FBR officials have been reluctant to transfer the land for the past five months. Talking to Pakistan Today, KUTC Managing Director Ejaz Khilji said that as the KUTC has already handled many issues regarding the important project, the transfer of funds is not a major problem.
He said that the transfer of land and the resettlement process were being delayed due to the extensive procedure and involvement of various government organisation and departments. It is pertinent to mention here that the KCR project is to be funded by the government of Japan through the Japan Bank for International Cooperation. Tokyo has commissioned 100 percent funding for the project under ‘STEP Loan’ at 0.2 percent mark-up rate for a 40-year payback time, including a 10-year grace period.
The project, with the completion of different studies like the Environmental Impact Assessment Study and the Resettlement Action Plan under the aegis of the Japan External Trade Organisation, has already been approved by the Executive Committee of the National Economic Council.
