CDWP approves two projects worth Rs 196 billion
ISLAMABAD: The government on Monday authorized two new development projects worth Rs 196.5 billion, including the Hyderabad-Sukkur highway at a cost of Rs 191.47 billion aimed at completing a major missing link in the Eastern Corridor which connects the ports of Gwadar and Karachi.
The meeting, chaired by Vice-Chairman of the Planning Commission Muhammad Jehanzeb Khan, recommended the M-6 project to the Executive Committee of the National Economic Council (ECNEC) with a significantly higher financial share from the government.
the 6-lane divided and fenced mega highway project was dropped due to proposed changes in its funding model at the last meeting, and is now requesting 92 billion rupees from the budget compared to the original road construction plan with private sector funding.
The meeting also approved a health-related project namely “Strengthening of existing DHQ and selected THQ, RHC and BHU in Awaran, Washuk, Khuzdar, Lesbela, Panjgur, Gwadar and Kech district” at a cost of 4.997 billion rupees.
Under current financial authorities, the CDWP itself can approve projects not exceeding Rs 10 billion, while projects with higher estimated costs are approved by ECNEC once the CDWP has approved them for use. technical reasons. P3A Chief Executive Officer (CEO) Ahmad Khan was tasked with also presenting funding from Viability Gap Funding (VGF).
As of April 12, P3A offered government funding of Rs 76 billion, or nearly 39%, which has now been increased to almost 50%. The BOT is now practically on a 50/50 stake in the public and private sector.
If all the obligations on the budget were taken, the VGF requirement would have been reduced to Rs 75.9 billion. Initially, the federal government’s share was only 0.7%, or 1.1 billion rupees. But the government’s share was increased after deciding to choose overheads such as escalation cost of Rs 12 billion, contingencies of around Rs 3 billion, and interest during construction of Rs 8 billion. .
Land for the project will also be purchased by the federal government as a separate project. The basis for the original PC-1 was a business feasibility study from December 2019, which proposed a cross-subsidy of the Sukkur-Multan highway for 10 years.
The project was originally supposed to be completed at a cost of 165 billion rupees, which has now grown to 191.5 billion rupees.
On Monday, P3A presented the financial model approved by its board to the CDWP. “The CDWP recommended the financial model for consideration by Ecnec who said the project would be implemented on a BOT – user fee basis with the provision of capital and Operational Sustainability Gap (VGF) funding for improve the financial viability and bankability of the project. .
Previously, the government sought to develop the project without government budget support and wanted it to be fully funded by the private sector which did not provide the response the government expected when the BOT model was initially finalized and approved in January. and March of last year respectively.
At the last meeting on April 12, the federal government’s share in the project was projected at Rs76bn or 39.5pc against the initially proposed share of Rs1.1bn or 0.7pc.