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June 3, 2019

Despite top court’s order,fate of KCR hangs in balance


June 3, 2019

The Karachi Circular Railway (KCR) project seems to be the most jinxed project of the port city. It started its operations in 1969 under the administration of the Pakistan Railways and was discontinued in 1999 due to major financial losses.

Since then, several futile attempts have been made by the federal and provincial governments to revive the local train. The KCR project comprises a 29.41-kilometre-long two-way KCR loop along with the provision of a 13.69-kilometre-long two-way dedicated track along the Pakistan Railways’ mainline, which stretches from the City Station to the Drigh Road Station.

Earlier in 2009, it was the Japan International Cooperation Agency (Jica) which showed interest in the project and conducted several studies on its own to help the Sindh government make this project functional. However, due to a deadlock between the two over the agency’s financial commitment for the project, Jica got out and China-Pakistan Economic Corridor (CPEC) came in. At present, it has been announced that the project has been included in the CPEC.

The real bone of contention between Jica and the Sindh government was the relocation of Katchi Abadis surrounding the KCR track. The Japanese agency, according to an official of the Sindh government, wanted the settlements surrounding the KCR track to be relocated before it made any financial commitment while the Sindh government was adamant that there should a financial close first.

The estimated cost of the KCR project under Jica was Rs246.58 billion with 0.1 per cent interest rate that was supposed to be returned in 40 years. However, under the CPEC, its approximate cost is $1.97 billion with 2.4 per cent interest rate and the loan has to be returned in 30 years. “The Japanese standard was also very high,” the official said.

Talking to The News, Sindh Mass Transit Authority (SMTA) Managing Director (MD) Iqtedar Ahmed insisted that Jica’s KCR cost was higher than its cost under the CPEC.

What’s wrong now?

The Supreme Court, in its order on May 9 this year, gave 15 days’ time to the Pakistan Railways to clear the KCR’s right of way of encroachments and hand it over to the Sindh government to start its operations in the next 15 days.

While the anti-encroachment operation along the KCR track is in full swing, deadlock persists between the federal and provincial government over KCR’s land.

In August 2018, the SMTA developed the project’s PC-1 and carried out a feasibility study with the help of the Karachi Urban Transport Corporation (KUTC), a regulatory authority for the implementation of the KCR project registered with the Security and Exchange Commission of Pakistan (SECP) as a public limited company in 2008. The Sindh government has also given the administrative approval of the project.

However, the federal finance ministry was supposed to issue its sovereign guarantee for the project which it has not done yet. For projects involving international tenders and huge costs, the federal finance ministry has to issue a sovereign guarantee.

The federal planning and development ministry also needs to approve the framework agreement of the KCR after which it will be formally included in the CPEC and there will be a financial close, following which international tenders will be invited for the project, the official explained.

The SMTA MD agreed that in order to bring the KCR formally into the CPEC framework, the federal government has to ink an agreement in order to start negotiations for loan. “China has to put forward names of three to four firms to which tender will be issued but first we need to finalise the framework agreement and decide loan negotiation’s terms and conditions,” he said.

Another hurdle in the execution of the project is the terms of reference for the transfer of land from the Pakistan Railways, which is a part of the federal government, to the Sindh government. The Pakistan Railways, according to a source who requested anonymity, wants equal land from the Sindh government in lieu of the KCR’s land before handing the provincial government KCR’s right of way.

However, the Sindh government claims that it was the real owner of the KCR’s land and it had only leased it to the Pakistan Railways for train operations. It is also the same purpose – the operations of train – for which the government wants the land back.

The SMTA MD shared with The News that they would need 360 acres of land to run the KCR which had to be transferred by the Pakistan Railways. “The land already belongs to Sindh and we will make no payments for it to the federal government,” he said.

Another unresolved issue between the federal and provincial governments is of the distribution of revenue that would be generated by the KCR. Under the KUTC, the Pakistan Railways would have its share of 65 per cent in the KCR revenue while the Sindh government and the local government would have 25 and 15 per cent shares respectively.

However, the Sindh government wants to bring the KUTC fully under the SMTA, which might affect the share of revenues.

An official of the Sindh government lamented that the SC direction would yield no result even if all the encroachments were cleared. The real administrative troubles lie between the provincial and federal governments which need to be addressed, he said.

Efforts are being made by Karachi Commissioner Iftikhar Shallwani to run the KCR from the City Station till Wazir Mansion by coordinating with the federal and provincial governments just to comply with the SC order, the official maintained.

“This would not bring any commuter to the KCR,” the official pointed out out. However, the SMTA MD commented that in order to run the KCR on a trial basis between Wazir Mansion and the City Station, they would need locomotives that only the federal government could provide. This operation could be done to comply with the SC order, he agreed.