KARACHI:

Pakistan’s railway sector, long described as the backbone of national connectivity, is again moving to the forefront of policy debates as the government turns to the Asian Development Bank (ADB) for support.

Years of underinvestment, safety lapses, and the stalling of promised Chinese funds have left Pakistan Railways in a precarious state, forcing policymakers to look elsewhere. Officials confirm that Islamabad is seeking a $2 billion package from the ADB to begin long-awaited modernisation works, most notably on the Karachi-to-Peshawar Main Line-1 (ML-1) route.

The development comes at a time when fiscal pressures, declining freight revenues, and growing competition from road transport have left the railways struggling to perform their role as a cost-effective logistics provider.

Once considered a symbol of national pride, Pakistan Railways now carries around 70 million passengers annually but operates on outdated tracks and antiquated signaling systems. The freight side of operations, which used to generate the bulk of revenue in the 1960s, has collapsed to less than a tenth of overall business, pushing industry and traders onto highways.

This shift has come at a steep cost: logistics expenses in Pakistan are estimated to be about 35% higher than the South Asian regional average, eroding export competitiveness and putting pressure on sectors such as textiles and agriculture. The decaying system has also reduced safety, with derailments and breakdowns becoming more common, further weakening public trust in rail travel.

The ML-1 project has been on the table for years under the China-Pakistan Economic Corridor (CPEC), initially tagged at $6.8 billion but now estimated to exceed $9 billion due to repeated delays and cost escalations. China had long been expected to bankroll the project as part of its Belt and Road Initiative, but its disbursements have slowed dramatically amid Pakistan’s worsening fiscal situation and Beijing’s own economic recalibrations.

The ADB’s decision to intervene, therefore, represents more than just a financial transaction. It reflects Islamabad’s growing reliance on multilateral lenders at a time when bilateral commitments have become uncertain. Analysts suggest the shift also diversifies Pakistan’s options and reduces overdependence on a single source of funding.

The proposed ADB package would target three areas: rehabilitation of ML-1 to allow faster and safer travel, development of a dedicated freight corridor to take pressure off highways, and the introduction of digital systems to monitor and secure railway operations. If executed properly, these changes could enable passenger trains to run at up to 160 kilometres per hour, cut travel time on key routes nearly by half, and encourage a revival of rail-based logistics.

Exporters, especially in the textile sector that accounts for nearly 60% of Pakistan’s exports, see in this a chance to reduce delays and cut costs associated with moving goods to Karachi Port. Improved connectivity between port cities and inland hubs such as Faisalabad and Multan could also enhance Pakistan’s role as a trade corridor linking South Asia with Central Asia.

Economists argue that the benefits go far beyond efficiency. Infrastructure investment of this scale has a multiplier effect, which generates tens of thousands of construction jobs and stimulates industries such as steel, cement, and services. A stronger railway backbone would also reduce the environmental toll of excessive trucking, lowering fuel consumption and emissions.

In a country where energy imports weigh heavily on the balance of payments, the savings could be significant. For passengers, meanwhile, modernised trains and safer systems would restore confidence in a service many have abandoned in favour of buses or private transport.

Pakistan’s external debt now exceeds $130 billion, much of it owed to multilateral lenders, and the repayment capacity remains a concern. While ADB loans are typically concessional, offering softer terms than commercial borrowing, they still require discipline in implementation.

Critics note that past railway projects have often been marred by inefficiency, corruption, and bureaucratic inertia. Without proper oversight and reform, there is a risk that even low-cost financing could add to the country’s debt burden without delivering transformative results. Transparency advocates are calling for the independent monitoring of funds to ensure they are not wasted.

China’s sidelined role also adds a geopolitical dimension. Over the past decade, Beijing has invested more than $25 billion in Pakistan, largely in energy and infrastructure, but its pace of financing has slowed markedly. Analysts attribute this partly to Pakistan’s fragile fiscal position, which increases repayment risks, and partly to China’s shifting global priorities as its own economy faces headwinds.

Some experts argue that China has not abandoned CPEC altogether but is recalibrating its involvement, focusing on selective projects while encouraging Pakistan to diversify its financing sources. In this context, the ADB’s re-emergence as a key financier could be seen less as a replacement and more as a complement to future Chinese investments.

There are lessons to draw. Bangladesh and India have both secured ADB support for rail and metro upgrades, with visible success in enhancing efficiency and safety. Pakistan has lagged behind, partly because of political instability and partly due to a centralised management structure that has resisted reform.

The ADB’s involvement might serve as leverage for Islamabad to introduce governance changes, open space for private sector participation, and embrace technology-driven solutions. Without such reforms, financial injections alone may not lead to the desired turnaround.

The writer is a member of PEC and holds a Master’s in Engineering