Islamabad: China will invest about $8.5 billion (R56 thousand crore) to upgrade Pakistan’s rail network and to build a key gas pipeline with Iran to meet the country’s energy needs, a media report said yesterday.

The Central Development Working Party (CDWP), a Pakistan body to authorise major projects, on Wednesday approved $10 billon worth two projects. China will provide loans equivalent to 85 per cent ($8.5 billion) of the cost of each project.

The cost of upgrading of Pakistan Railways existing Mainline (ML-I) and establishment of a dry port near Havelian is $8.2 billion, which China will finance with a $7 billion concessionary loan.

This project is part of $46 billion China-Pakistan Economic Corridor (CPEC) package, signed during the April 2015 visit of Chinese president to Pakistan. The estimated cost of Gwadar-Nawabshah LNG Terminal & Pipeline project, also cleared in principle, is $2 billion including $1.4 billion Chinese loan.

This project is strategically important for Pakistan, as it will eventually link the country’s gas network with Iranian system.