Pakistan and China are likely to sign formal contract for up-gradation and expansion of Karakoram Highway (KKH). Under the agreement to be signed during the forthcoming visit of President Hu Jintao, initially the Chinese government will provide $40 million to meet immediate financial needs.
In this connection, the China Road and Bridge Corporation (CRBC), a state-owned construction firm, has already completed the feasibility study.
Administrative and financial arrangements have been worked out with the Pakistani authority to initiate the project as soon as possible. According to China's Assets Supervision and Administration Commission (ASAC), they have sent proposals to relevant institutions in Pakistan for formal contract.
Earlier, the two countries signed a memorandum of understanding to pave the way for practical operation of the project.
Total estimated cost of the project is $794 million. It was suggested that 90 percent of the cost would be met by the balance of the preferential export buyer's credit ($500 million) committed by the government of China in November, 2003, while the remaining 10 percent would be financed by the government of Pakistan. Other potential sources will be sought in case of any shortfall.
As per understanding, CRBC will be in charge of the design and reconstruction of the highway as general contractor. At the first stage, the 335-km road between the Raikot bridge and Khunjerab Pass would be rebuilt and upgraded.
The two sides have agreed to complete the drawing of the blueprint, listing the work items and signing commercial contracts by the end of October, and try to start working by the end of the year.
The KKH is the only overland connection between China and Pakistan, at present. The 809-km highway, whose location is 600 to 4,700 metres above sea level, was built in 1978 for special geopolitical reasons. It has been largely broken due to lack of maintenance, and the earthquake in 2005.
During President Musharraf's visit to China in February this year, the two sides had reached an agreement, in principle, to upgrade the Karakoram Highway.