Reconstruction of the Karakoram Highway

Route description

The KKH spans the 887-kilometre-long (551 mi) distance between the China–Pakistan border and the town of Hasan Abdal. At Burhan Interchange near Hasan Abdal, the existing M1 motorway will intersect the N-35 at the Shah Maqsood Interchange. From there, access onwards to Islamabad and Lahore continues as part of the existing M1 and M2 motorways. Hasan Abdal will also be at intersection of the Eastern Alignment, and Western Alignment.

E-35 Expressway between Hasan Abdal and Havelian

Upgrades to the 487-kilometre-long (303 mi) section between Hasan Abdal and Raikot of the Karakoram Highway are officially referred to in Pakistan as the Karakoram Highway Phase 2 project. At the southern end of the N-35, works are already underway to construct a 59-kilometre-long (37 mi), six-lane controlled-access highway between Hasan Abdal and Havelian which upon completion will be officially referred to as the E-35 expressway, or Hazara Motorway.

Havelian to Shinkiari

North of Havelian, the next 66 kilometres (41 mi) of road will be upgraded to a four-lane dual carriageway between Havelian and Shinkiari. Groundbreaking on this portion commenced in April 2016.

Shinkiari to Thakot

The entire 354 kilometres (220 mi) of roadway north of Shinkiari and ending in Raikot, near Chilas will be constructed as a two-lane highway. Construction on the first section between Shinkiari and Thakot commenced in April 2016 jointly with construction of the Havelian to Shinkiari four-lane dual carriageway further south. Construction on both these sections is expected to be completed with 42 months at a cost of approximately $1.26 billion with 90% of funding to come from China's EXIM bank in the form of low interest rate concessional loans.

Thakot to Raikot

Between Thakot and Raikot spans an area in which the government of Pakistan is currently either planning or actively constructing several hydropower projects, most notably the Diamer-Bhasha Dam and Dasu Dam. Sections of the N-35 around these projects will be completely rebuilt in tandem with dam construction In the interim, this section of the N-35 is currently being upgraded from its current state until dam construction commences in full force at a later date. Improvement projects on this section are expected to be completed by January 2017 at a cost of approximately $72 million.

Raikot to the Chinese border

The next 335 kilometres (208 mi) of roadway connect Raikot to the China-Pakistan border. Reconstruction works on this section of roadway preceded the CPEC, and were initiated after severe damage to roadways in the area following the 2010 Pakistan floods. Most of this section of roadway was completed in September 2012 at a cost of $510 million, and was severely dilapidated even prior to the 2010 flooding.

China-Pakistan Friendship Tunnels

In addition to flooding, a large earthquake rocked the region nearest to the China-Pakistan border in 2010, triggering massive landslides which dammed the Indus River, and resulted in the formation of the Attabad Lake. Portions of the N-35 were submerged in the lake, forcing all vehicular traffic onto barges to traverse the new reservoir. Construction on a 24-kilometre (15 mi) series of bridges and tunnels to Attabad Lake began in 2012 and required 36 months for completion. The bypass consists of two large bridges, 78 culverts and five kilometres (3.1 mi) worth of tunnels that were inaugurated for public use on 14 September 2015 at a cost of $275 million.

Gilgit to Skardu

The 175-kilometre (109 mi) road between Gilgit and Skardu will be upgraded to a four-lane road at a cost of $475 million to provide direct access to Skardu from the N-35.

Cost and Financing

As part of CPEC, approximately $11 billion worth of infrastructure projects being developed by the Pakistani government will be financed by concessionary loans, with composite interest rates of 1.6%, after Pakistan successfully lobbied the Chinese government to reduce interest rates from an initial 3%. The concessional loans are subsidised by the government of China, and are to be dispersed by the Exim Bank of China and the China Development Bank. For comparison, loans for previous Pakistani infrastructure projects financed by the World Bank carried an interest rate between 5% and 8.5%, while interest rates on market loans approach 12%.

The China Development Bank will finance the $920 million towards the cost of reconstruction of the 487-kilometre (303 mi) portion of the Karakoram Highway between Hasan Abdal and Raikot.

An addition $1.26 billion will be lent by the China Exim Bank for the construction of the Havelian to Thakot portion of this stretch of roadway, to be dispersed as low-interest rate concessional loans.

Construction works on the China-Pakistan Friendship Tunnels can be traced to 2013, when China began construction on a 24-kilometre (15 mi) bypass of Attabad Lake with a combination of 5 km worth of tunnels, two large bridges, and 78 small bridges to bypass the lake which had been formed after a 2010 earthquake triggered massive landslides. The resulting landslides cut off both the Indus River and Karakoram Highway resulting in the formation of the reservoir. Prior to completion of the bypass, all vehicular traffic had to be loaded onto barges to traverse the new reservoir. Construction of the tunnels began in 2012 and required 36 months for completion. The 24 km long series of bridges and tunnels was inaugurated on 15 September 2015 at a cost of $275 million and was hailed as a major accomplishment.