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Centre waives mark-up on KCR loan

January 02, 2013

ISLAMABAD/KARACHI, Jan 1: The Economic Coordination Committee (ECC) of the federal cabinet on Tuesday allowed Pakistan Railways to utilise $2.4 billion concessionary loan to revive Karachi Circular Railway without paying any mark-up to the federal government.

The ECC meeting, which was presided over by Federal Finance Minister Dr Hafeez Shaikh, agreed to grant the waiver sought by the railways ministry on lending charges to the Karachi Urban Transport Corporation for “Revival of Karachi Circular Railways as Modern Commuter System”.

The Japan International Cooperation Agency (JICA) has already agreed to provide 93.5 per cent ($2.4 billion) of the estimated cost through soft loan at a mark-up of 0.2 per cent payable in 40 years, including 10-year grace period.

The remaining 6.5 per cent ($169.6 million) equity will be borne by the railways ministry (60 per cent equity), Sindh government (25 per cent) and the Karachi Metropolitan Corporation (15 per cent).

Under the government policy, foreign loans are normally re-lent to the government entities at a higher mark-up by the federal government even if these loans are provided at a lower interest rate.

The ECC approval for the waiver would make the Japanese loan available for the project at the original mark-up of 0.2 per cent payable to JICA over 40 years without extra charges being paid to the federal government.

The Karachi Circular Railway (KCR) track will be around 50 kilometres, involving 27 stations to be built around the city to improve the quality of life of the citizens.

According to sources, over the years the project has seen many changes with the cost being enhanced every time. Earlier roughly 10 per cent of the nearly 50-kilometre-long KCR track was to be elevated to negotiate some 22 level crossings but now with road network being extended extensively almost 40 per cent to 50 per cent of the track will be elevated.

The sources said that 20- to 25-kilometre-long-elevated portion of the dual railway tracks would be passing through the densely populated areas of Gulistan-i-Jauhar, Gulshan-i-Iqbal, Nazimabad, SITE, Baldia and the project cost that initially was somewhere around $ 872 million has now gone up to around $2.4 billion.

They said that under the project air-conditioned trains running between 45 and 60 kilometres per hour speed would be operating between 5am and midnight, with a gap of around four minutes between two trains.

The trains would be serving some 28 stations, where they would stop for 40 seconds to one minute each, the sources added.

They said that some 250 trains powered by electricity, to be obtained from dedicated power generation stations, would be carrying around 700,000 passengers a day, with each train having a capacity of approximately 1,700 passengers paying a distance-based fare that was said to be compatible with the road-based public transport fares.

The sources said the project had been planned keeping in view the example of Delhi Metro, which was constructed with a foreign loan of $2.78 billion obtained at a comparatively high mark-up rate of over one per cent. The Metro with over 40-km-long tracks was being used by over 0.6 million commuters on a daily basis and after returning its short- and long-term loan commitments as well as all other expenses, it had earned a profit of over Rs2.5 billion in 2007.

The KCR stations are to have limited access from where the commuters could board the trains by using smart card, e-tickets so that free-riders could be checked, the sources said.

The sources said that there were plans to add the airport to the loop at a later stage.

They added that the entire track would be fenced so that people living along the railway lines did not fall victim to fast-moving trains.

It is noteworthy that a large number of people are killed annually while crossing the fenceless railway tracks on both sides of which numerous encroachments, kutchi abadis and slums have mushroomed in the city.

The sources said that Karachi commuters, who are held hostage to the exploitive private transporters that is aided by the inefficient administration, would instantly switch over to the comparatively quicker KCR trains — which complete 50 kilometres within 60 to 70 minutes — if the fare structure was prepared realistically and was within the reach of common commuters.

Karachi is among the few mega cities which did not have its own railway-based mass transit system.

It is a common observation that commuters have to travel in buses and minibuses — majority of which are poorly maintained causing harm to the environment with poisonous emissions — in subhuman conditions, sometimes even sitting on the rooftops.

KCR (1969-99) The Karachi Circular Railway began operation in 1969 through Pakistan Railways with the aim of providing better transport facilities to Karachi and the surrounding suburbs. The original KCR line extended from Drigh Road Station and ended at Karachi City Station carrying six million passengers annually.

The KCR was an instant success and made a significant profit in its first year of operation. During the 1970s and 1980s, the KCR was at its peak with 104 daily trains, of which 80 trains ran on the main track while the remaining 24 ran on a loop line. KCR started incurring major losses during the 1990s and its operation was discontinued in 1999.