PPPA Board approves transaction structure of KCR

By Staff Reporter | APP Jan 25, 2022

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

Minister for Planning Development and Special Initiatives Asad Umar chaired the 19th Public-Private Partnership Authority (P3A) Board meeting held here to review the KCR project.

The Board reviewed the key statistics and components of the project proposal of KCR which envisaged the Project to be built on a 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 & maintenance (O&M) of the project from its own resources under a single package contract.

The approved project proposal and transaction structure entailed the project to be implemented on a Build-Operate-Transfer (BOT)– user charge basis and the Government of Pakistan would provide capital 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 to provide 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 ridership of 457,000 which is expected to soar to 1 million per day by the end of 33 years concession period.

The project would deploy the use of electric trains and would be operational for 7 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 & time savings, contribution towards promoting gender equality, and spill-over tax impact.

The chair of the board Asad Umar said “the project is an important part of the Karachi Transformation Plan and would play a pivotal role in providing affordable and reliable public transport system to the Karachiites’.

He said that after the 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 would be brought to the market after approval by the Executive Committee of the National Economic Council (ECNEC).

Deputy Chairman Planning Commission Dr. Muhammad Jahanzeb Khan, 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.

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