MoF decides to build Karachi to Hyderabad Motorway
* Also decides to invite international firms for making investment in Rs 15 bilion project
By Sajid Chaudhry
ISLAMABAD: The Ministry of Finance here on Tuesday decided to build Karachi to Hyderabad Motorway on Build-Operate-Transfer (BOT) basis and international firms will be invited for making investment in Rs 15 billion project, official sources informed.
A coordination committee has been formed to speed up the process for award of contract through international bidding to the international firms and bidding of the project will be conducted under strict Pakistan Public Procurement Regulatory Authority, added the official sources.
Federal Minister for Finance Dr Hafeez Shaikh chaired the meeting, which reviewed the progress on the key communication projects where international investors have shown interest, officials from NHA, Planning Commission also participated in the meeting.
Dr Shaikh formed a coordination committee to expedite the BOT projects and attract serious local and international parties for participating in these projects.
A brief strategy for the fast track execution of projects was put forward by Planning Commission (PC) Implementation and Monitoring member. In a presentation, the member proposed that an Implementation Board comprising PC deputy chairman as chairman, and representatives from the concerned ministries/departments, is needed which will have its own constitution and legal entity. This board will focus on assisting Executing Agencies (EAs) to implement rules, regulation, policies and procedures for PPP arrangements, keeping in view laws and regulations defined by procurement regulators (PPRA) and International Standards. Facilitate EAs for underdevelopment projects to ensure timely execution and completion. Coordinate among different ministries and departments to ensure fast track development and management of projects under PPP arrangements. Coordinate with banks and financial institutions to devise and implement strategies for minimising time consumed in the arrangement of financing for the concessionaire. Provide a forum for finalisation of agreements between EAs and investors/developers, under PPP arrangements, where implementation body will act neutral to provide a balance between interests of public and private parties.
The National Highway Authority (NHA) chairman added that the said board will prove to be useful and it will assist NHA in many ways. While concluding the meeting, the finance minister agreed to form a coordination committee, which will work on the same lines as of the proposed Implementation Board. The committee will comprise of PC deputy chairman, member, NHA chairman, secretary communication and secretary planning. This committee will especially focus on construction of mega project of Karachi to Hyderabad Motorway M-9.
After completion of Karachi to Hyderabad Motorway - 134.5 kilometres long M-9 project - the government would reportedly generate a net revenue of Rs 1.805 billion in the first year 2013 - while over 25 years net revenue is forecast to reach Rs 24.383 billion.
Working papers of the six-lane motorway M-9 project available with Daily Times revealed that after escalation, total cost of the project is estimated to be Rs 16.845 billion and it would complete within two years from 2011-2012. Construction of M-9 project would reportedly be completed in five phases, whereas escalation cost could rise at the rate of 5.0 percent each year during the entire five phases. However, in break-up of estimated cost, Rs 13.781 billion would be spent on construction of the motorway, while Rs 3.064 billion is estimated to be spent in the form of other costs including toll plaza equipment, lighting, communication system, rescue and recovery ambulances, etc.
Working papers for the said project explained that the federal government has set the deadline for completion of the project by December 26, 2012, while after completion of the project trade efficiency through land route would increase as well as time and fuel can also be saved on travelling from Karachi to Hyderabad. Proposal for construction of M-9 was reportedly submitted on April 12, 2010, whereas the document revealed that the government was committed to start constructing the said project from January 1, 2011.
Additionally, the M-9 project appears to be an investment opportunity in the immediate term and given the fact that a firm which submitted a bid to undertake the M-9 project in 2006 and forecast an internal rate of return of over 30 percent but was unable to pursue the same due to political reasons. Whereas NHA has recently guaranteed an internal rate of return of 22 percent and according to the diligence of the financial consultants of Employees Old-Age Benefits Institution (EOBI) and Deloittee International, the M-9 project could potentially bear an internal rate of return of over 28 percent for the EOBI funds, although EOBI submitted an unsolicited proposal of NHA - expressing its wish to undertake the project, the working paper revealed.
The document also maintained that over 25 years, the federal government would be able to generate revenue up to Rs 24.383 billion till year 2035.
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Luwari Road Tunnel
‘PM promises to provide Rs 1.5bn for early completion’
ISLAMABAD: The Prime Minister Yousaf Raza Gilani has promised to provide Rs 1.5 billion for the early completion of Luwari Road Tunnel, whereas the government has allocated Rs 6.5 billion this year for construction projects of National Highway Authority (NHA) in Khyber Pakhtunkhwa.
Federal Minister for Communications Dr Arbab Alamgir Khan Khalil said this at a meeting chaired by him in the Ministry of Communications. The meeting was also attended by the National Assembly Member from Chitral Shahzada Mohayy-ud-din, Federal Secretary Communications Anwar Ahmad Khan, Additional Secretary Amjad Nazeer, NHA Chairman Syed Muhammad Ali Gardezi, Construction Member Aurangzeb Khan, Luwari Tunnel Colonel GM (r) Salman Arshad, representatives of SAMBO and other high officials.
Earlier, the federal minister was briefed on the progress of NHA projects. He was told that the National Highway Council recently reviewed the development portfolio of NHA for Public Sector Development Programme (PSDP) 2011-12 and approved province-wise distribution of funds. In the current budget 2011-12, Rs 8782.36 million have been allocated by NHA for Balochistan which is 24.18 percent of the total PSDP allocation of NHA amounting to Rs 39,900.26 million.
Likewise, 38.50 percent funds are allocated for Punjab, 16.68 percent Sindh, 16.17 percent for KP and 4.46 percent for Gilgit Baltistan.
While emphasising the significance of homogenous development across the country, the minister said that equitable distribution of PSDP resources among all the provinces will go a long way in inter-provincial harmony. Commenting upon the slow pace of work on Luwari Tunnel, the federal minister said that we are determined to timely complete Luwari Tunnel. He clarified that the delay in its construction has been only due to last year’s flood, law and order situation and shortage of funds. He told that devastating floods of monsoon 2010, forced the government to divert some of the funds for rehabilitation of flood affectees and reconstruction of flood-affected areas. To accommodate flood related expenditure, the government imposed 50 percent cut on PSDP 2010-11 including the share of NHA. NHA received only Rs 18 billion out of its PSDP allocation. Consequently, NHA projects across Pakistan were impacted by the cut in PSDP due to which cash flow of the contractors got disturbed and progress on ground suffered. However, he added, we are committed to early completion of all projects. He said that NHA as per policy decision is according maximum attention to projects, which have achieved 60 percent or more progress. Once these ongoing projects are substantially completed, NHA would embark upon other planned projects for which feasibility studies, design, etc, are already in hand. staff report
