Public-Private Partnership Authority (P3A) Board approved the project proposal/transaction structure for development and operation of Karachi Circular Railway (KCR) Project.

The Board reviewed the key statistics and components of the project proposal of the KCR, which envisaged the project to be built on a Public-Private Partnership (PPP) basis, whereby, the private sector would be responsible to finance the construction of the civil works, Electrical and Mechanical (E&M) component (including procurement of Rolling Stock) and Operations and Maintenance (O&M) of the project from its own resources under a single package contract.

Federal Minister for Planning, Development and Special Initiatives Asad Umar chaired the 19th P3A Board meeting in Islamabad on Tuesday.

Dr Muhammad Jahanzeb Khan, deputy chairman Planning Commission and Vice-Chairman P3A Board, Secretary Finance, Secretary MoPD&SI, Secretary Railways, Member Private Sector Development, Private Sector P3A Board members, and Chief Executive Officer-P3A were among the meeting participants.

The meeting was also attended by Member International Rescue Committee (IRC) and Implementation Planning Commission; Director-General Debt Office (Finance Division); Chief Economist Planning Commission, and senior officials of the MoPD&SI, P3A, and Pakistan Railways.

The approved Project Proposal/TS entailed the project to be implemented on a Build-Operate-Transfer (BOT) – user charge basis and the Government of Pakistan (GOP) to provide Capital and Operational Viability Gap Funding (VGF) in order to improve the financial viability and bankability of the project.

To seek adequate investor interest in the project and to magnify its success prospects, the private sector would also be given Minimum Revenue Guarantee (MRG) for initial operational years and a right to undertake commercial development of the KCR stations to supplement fare and non-fare revenues incidental to the project.

The project aims at providing reliable, safe, and environmentally-friendly public transport to the Metropolitan City of Karachi.

The project entails the construction of a 43-km dual-track urban rail mass transit system expected to be built in a period of three years.

The project is expected to serve daily rider-ship of 457K, which is expected to soar to one million per day by the end of 33 years concession period.

The project will deploy the use of electric trains and will be operational for seven days a week and 17 hours a day. The project encompasses the construction of 30 stations along the corridor covering densely-populated areas of the city. The economic benefits of the project are phenomenal in terms of saving vehicle operating costs, environmental protection, accidents and time savings, contribution towards promoting gender equality, and spill-over tax impact.

Asad Umar, while highlighting the importance of the project said “the project is an important part of the Karachi Transformation Plan and will play a pivotal role in providing affordable and reliable public transport system to the Karachiites”.

He said that following approval of the KCR Project by the P3A Board, the project appraisal process for the Karachi-Pipri Freight Corridor Project should also be completed at the earliest as that project is also critical in terms of easing congestion at the Karachi Port. The project with its transaction structure approved by the P3A Board as mentioned above will be brought to the market after approval by the Executive Committee of the National Economic Council (Ecnec).

This report was first published in Business Recorder on Jan 27, 2022.