Pakistan is preparing to ask China to allow leading local construction firms to bid for the $1.8 billion Karakoram Highway project as both countries work to accelerate progress under the China-Pakistan Economic Corridor (CPEC).
At the same time, the government is reviewing the option of financing the project itself if delays in the loan agreement continue.
Issue to Be Raised in Beijing
The proposal will be discussed during the upcoming Joint Technical Working Group meeting, expected later this month in Beijing.
Planning Minister Ahsan Iqbal directed officials to prioritize the project during a recent CPEC review meeting.
He said Pakistan would seek amendments to the existing government-to-government framework, which currently limits competition to three Chinese companies.
Pakistan Wants Local Firms to Compete
Under the new proposal, Pakistan will request China to allow qualified Pakistani contractors to participate in the bidding process.
Officials believe local companies could complete the project at significantly lower costs while maintaining required standards.
Moreover, broader competition could help speed up construction and reduce financial pressure.
Road Needed Before 2028
The existing 280-kilometre Karakoram Highway will partially submerge after the completion of the Diamer-Bhasha Dam, which is expected by May 2028.
Therefore, Pakistan and China plan to construct a new international-standard highway to maintain year-round road connectivity between the two countries.
However, despite project approval, both sides have yet to finalize the financing agreement.
Government Reviews Self-Financing
The project is estimated to cost Rs502 billion ($1.8 billion). The first phase alone carries an estimated price tag of Rs320 billion ($1.1 billion).
Planning Ministry officials estimate that local contractors could reduce the first-phase cost by nearly 35%, lowering it to around Rs208 billion.
Consequently, the government has begun reviewing self-financing options if external funding is delayed further.
Financing Talks Continue
Pakistan and China agreed in principle in 2025 that China would finance 85% of the project, while Pakistan would cover the remaining costs.
Although Pakistani ministries sent several requests to finalize the financing agreement, negotiations progressed slowly.
Recently, however, Chinese authorities proposed holding a technical working group meeting to review project costs and financing arrangements.
Loan Terms Still Under Discussion
Pakistan continues to seek a concessionary loan for the highway project.
China, meanwhile, has indicated a preference for commercial financing.
Officials expect both sides to discuss these financing options during the upcoming meeting in Beijing.
Strategic Importance of the Project
The Karakoram Highway remains one of the most important transport links under CPEC, connecting Pakistan with China and supporting regional trade.
As a result, the government considers timely completion of the replacement road essential for protecting long-term connectivity and ensuring uninterrupted trade flows.
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