Reconstruction of the Karakoram Highway the China-Pakistan Friendship Tunnels can be traced to 2013, when China began construction on a 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
Reconstruction of the Karakoram Highway 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 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