ISLAMABAD .: Prime Minister Nawaz Sharif on Monday performed the ground-breaking of ‘financially unviable’ Lahore-Sialkot motorway project at a cost of Rs45.4 billion, just a couple of hours after the Executive Committee of National Economic Council (Ecnec) approved it.
Headed by Finance Minister Ishaq Dar, Ecnec – the highest project approval authority – approved the scheme including a subsidy of Rs18 billion to make the project ‘financially viable’, said officials of the Ministry of Finance.
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In total, Ecnec approved seven projects costing Rs201.2 billion.
Of the Rs45.4 billion estimated cost, the motorway will cost Rs43.8 billion and the remaining is for administrative expenses of the National Highway Authority (NHA).
Showing an unusual urgency, just hours after Ecnec’s approval, the premier performed the ground-breaking in Sialkot, which is the constituency of Water and Power Minister Khawaja Asif.
The government did not even wait for the approval of Ecnec minutes and went ahead with the project.
The Lahore-Sialkot project will be operated on build-operate-transfer (BOT) basis, according to a hand-out issued by the finance ministry after the Ecnec meeting. Usually, in the BOT model, the contractor builds the project from its own resources, recovers the cost and makes profit by operating the project for a certain period.
However, out of Rs43.8 billion, the federal government will give a total assistance of Rs23 billion to the contractor – the Frontier Works Organisation (FWO).
An amount of Rs18 billion will be given in the Viability Gap Funding (VGF) by the Ministry of Planning and Development by slashing funds for other projects while Rs5 billion will be provided by the Ministry of Finance as loan to the NHA. The NHA will further lend the amount to the FWO.
The Ministry of Planning had termed the project financially unviable, which the NHA also confirmed.
“There are hardly 15% of projects that are awarded on BOT basis but are completed without government’s financial assistance,” said NHA spokesman Kashif Zaman.
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He said despite the Rs23 billion government assistance for making the project financially viable, it would still be treated as built on the BOT model.
The government would not claim any share in revenues generated by charging a tax from commuters despite providing the subsidy.
The finance ministry said the project would be completed in 27 months and envisages the construction of 89km, four-lane access controlled motorway.
Ecnec approved the Balochistan Integrated Water Resource Management and Development Project at a revised cost of Rs22.2 billion.
The project will cover almost one-fourth of the Balochistan area and will provide benefits of clean drinking water, reduced risk of floods, less erosion, more fuel wood, more fodder for livestock and saving endangered forests.
Ecnec also approved the Lowari Road Tunnel and Access Road Project at a revised cost of Rs26.9 billion. The project is expected to be completed by October 2017.
The revision of cost is the result of increase in the scope of work which includes increase in the width of the tunnel from 6 metres to 7.5 metres with clear height of 5 metres.
Equally important and related to the Lowari Tunnel project, the improvement and widening of N-45 project also got Ecnec’s approval at a revised cost of Rs17.4 billion. The project is located at Chakdara, Timergara, Akhagram, Dir Kalkatak, Chitral.
Ecnec also revised upwards the cost of Burhan-Havelian Expressway (E-35) to Rs34.2 billion.
The cost of the project is revised due to addition of the third lane on either side of the already on-going project. It is part of the China-Pakistan Economic Corridor (CPEC) and funded by the Asian Development Bank.
Ecnec approved installation of the Ship Lift and Transfer System at the Karachi Shipyard at a revised cost of Rs9.6 billion.
The facility will cater to the commercial vessels up to 7,781 dead weight tons net lifting capacity along with establishment of 13 fully equipped repair stations. The project will be completed by September 2017 as it is already in progress.
Ecnec also approved the procurement of 75 diesel electric locomotives at a cost of 45.5 billion including a foreign loan of Rs31.7 billion. These will be completely built units (CBU) used for freight/ passenger operations.
Published in The Express Tribune, August 23rd, 2016.