BEIJING, Nov 8: A formal contract was signed here on Thursday under which China would supply 69 locomotives and 175 passengers coaches worth $200 million to Pakistan to modernize its railway system.

The decision to this effect was taken during the meeting between President Pervez Musharraf and the Chinese premier, Zhu Rongji, held in Islamabad in May this year.

The signing ceremony was held at the Great Hall of the People. The Chairman Pakistan Railways Board, Saeeduz Zafar signed the contract, while Hu Cheng, Vice Minister of Foreign Trade and Economic Affairs, represented the Chinese government.

Under the agreement, Exim Bank of China will meet 87.5 per cent of the total financial requirements on supplier credit basis, while the rest of amount will be arranged by Pakistan Railways. The repayment period for the credit is 15 years. Three years will be grace period and the interest rate will be about five per cent.

“The agreement also envisages transfer of technology and training of Pakistani manpower for producing the same engines and coaches in the country,” Saeeduz Zafar told APP after signing the contract.

The supply of these engines and coaches will start from early 2002.

First 15 engines and 40 coaches will be manufactured in China, while the rest of total 69 and 175 respectively will be in Pakistan for which existing railway workshops will be updated. Two major Chinese companies - China National Machinery Import and Export Corporation and Dongfang Electric Corporation - will be responsible to implement the project.

He said Pakistan had also planned to modernize its railway track and signal system with the help of foreign assistance.—APP