China Eximbank provides $89.3 million buyer’s credit loan for purchase of 75 passenger coaches and locomotives, Pakistan (Linked to Project ID#35902)

On December 14, 2009, Pakistan Railways signed a $89,371,582.55 buyer’s credit loan agreement with China Eximbank for the purchase of 75 railway coaches and locomotives. Under the terms of the buyer’s credit loan agreement [ID#BLA0922], Pakistan Railways agreed to purchase 75 railway coaches and locomotives from Dongfang Electric Corporation (DEC). This loan agreement was plagued by controversy. In 2011, the Chairman of Pakistan Railways conceded before a two-member Supreme Court bench that procurement rules and regulations were violated in the sole-source procurement of the 75 locomotives, resulting in huge losses to the national exchequer. Earlier, in 2006, Pakistan Railways had decided to purchase a further 45 locomotives from Dongfang Electric Corporation, despite criticism over faulty locomotives that it purchased from Dongfang Electric Corporation in 2001. However, the Chinese company expressed willingness to re-design the already delivered 30 locomotives from the original order, such that their under-frames would be strengthened and their weight would be reduced to less than 140 tons. However, the U.S. Government pressured the Government of Pakistan to cancel its loan agreement with China Eximbank, and in 2013 Pakistan Railways cancelled the agreement. According to a 2014/2015 status report from Government of Pakistan’s Economic Affairs Division), there were no disbursements through the China Eximbank buyer’s credit loan agreement ID#BLA0922] as of June 30, 2015.

Additional details

This project is linked to #35902, which is another BCL for locomotives signed on December 14, 2009.

Number of official sources

3

Number of total sources

16