Pakistan Eyes Self-Funding $1.8 Bn Karakoram Highway Project As China Delays Financing | Exclusive
News world Pakistan Eyes Self-Funding $1.8 Bn Karakoram Highway Project As China Delays Financing | Exclusive Pakistan Eyes Self-Funding $1.8 Bn Karakoram Highway Project As
News world Pakistan Eyes Self-Funding $1.8 Bn Karakoram Highway Project As China Delays Financing | Exclusive Pakistan Eyes Self-Funding $1.8 Bn Karakoram Highway Project As China Delays Financing | Exclusive Reported By, Edited By Last Updated: August 05, 2026, 15:34 IST Indian intelligence sources said Beijing's reluctance to extend concessionary financing reflects growing caution over large capital commitments in Pakistan-Occupied Kashmir Rapid Read Although Pakistan and China agreed in principle in May 2025 on a financing structure under which Beijing would fund around 85 per cent of the project, the formal agreement remains unsigned. Pakistan is considering allowing domestic contractors to bid for the $1.8 billion Karakoram Highway (KKH) realignment project after prolonged delays in securing Chinese financing, top Indian intelligence sources told CNN-News18 on Wednesday. The move comes as Islamabad races against time to complete an alternative route before a 280-km stretch of the existing highway is submerged by the reservoir of the Diamer-Bhasha Dam, expected by May 2028.
According to the sources, Pakistan plans to seek changes to the existing government-to-government framework with China, which currently restricts bidding to three Chinese state-owned companies. Islamabad now wants leading Pakistani construction firms to be allowed to participate in the project in an effort to speed up execution. The Karakoram Highway is a critical artery linking Pakistan with China through the Khunjerab Pass and forms a key component of the China-Pakistan Economic Corridor (CPEC). Although Pakistan and China agreed in principle in May 2025 on a financing structure under which Beijing would fund around 85 per cent of the project, the formal agreement remains unsigned, the sources said. Pakistan has repeatedly sought a concessionary loan from China over the past year, but Beijing has yet to respond positively. Instead, China is understood to have proposed commercial lending terms and has reportedly declined to begin the tendering process until the financing agreement is finalised.
The project, estimated to cost around $1.8 billion (approximately Rs 502 billion), has become increasingly urgent as construction timelines tighten ahead of the scheduled submergence of the existing highway. According to Indian intelligence sources, Beijing’s reluctance to extend concessionary financing reflects growing caution over large capital commitments in Pakistan-Occupied Kashmir (PoK), a region claimed by India and one that carries legal, diplomatic and security sensitivities. Strategic analysts in New Delhi believe China’s preference for commercial interest rates on such a key CPEC project also points to increasing financial friction between the two partners and rising concerns in Beijing over Pakistan’s debt sustainability. The delay, the sources said, has temporarily complicated logistical planning along the China-Pakistan corridor, particularly around the Gilgit-Baltistan region, where the highway serves as a crucial supply route. They further assessed that if Pakistan is ultimately forced to self-finance a substantial portion of the project, it could place additional strain on the country’s already fragile fiscal position, which continues to face pressure from high debt levels, inflation and repeated external financing requirements.
The BriefWire