Govt approves two motorway projects under public-private partnership

ISLAMABAD: Public Private Partnership Authority (P3A) Board on Thursday approved project proposals for the construction of Sukkur-Hyderabad Motorway (M6) and Kharian-Rawalpindi Motorway (KRM) on Public Private Partnership (PPP) basis during its 20th meeting.

The projects were approved in the meeting chaired by deputy chairmanship Mohammad Jehanzeb Khan. The authority also gave a green signal to the Project Development Facility Regulations, 2022.

For M6, the board considered the project proposal of the successful bidder, which had demanded provision of capital Viability Gap Funding (VGF) amounting to Rs 9.5 billion only. The M6 project encompasses the construction of a 306km green-field controlled access motorway at a cost of Rs 307 billion per successful bidder’s proposal. The successful bidder had proposed to pay Rs 408 billion guaranteed revenue share to GoP/ NHA over the operations period of 22 years. The project is expected to generate Rs918 billion in the form of corporate taxes. The board also accorded approval to the proposal for KRM on PPP basis. It was informed that the project would be floated in the market in a short while. KRM is a 117 KM 4-lane (convertible to 6-lane) green-field facility that is expected to be completed in a period of 2 years following the achievement of financial close by the concessionaire. KRM was approved by the Risk Management Unit, Central Development Working Party, and Executive Committee of the National Economic Council.

Besides the above, the board also approved Project Development Facility (PDF) Regulations, 2022, which envisaged providing financial support to the implementing agencies to meet transaction advisory cost related to the PPP project development, structuring, and procurement. Under the said regulation, P3A was already providing PDF support to several implementing agencies, including Pakistan Post to prepare its flagship logistics business project for offering to the private sector.

During the meeting, it was informed that M6 was the only missing link between the country’s north-south bound motorway network. With its completion, the commuters would be able to use the motorway network while traveling from the port city of Karachi to Peshawar and vice-versa. The project is expected to generate phenomenal economic benefits through promoting tourism, creating job opportunities, reducing travel time, and saving costs, and contributing towards the socio-economic development of urban and rural centers along the corridor.

“M6 is one of the most important projects in the Sindh package that the incumbent government had designed to benefit masses of the Sindh province, and with its coming online, the region is going to witness a major uplift in trade & economic activities,” said Deputy Chairman Planning Commission (DCPC) while highlighting the importance of the project. The meeting was further informed that Sindh would pay for the land acquisition on the behalf of the National Highway Authority (NHA) and meetings in that regard took place with provincial authorities of Sindh.

NHA had initiated an international competitive bidding process in which it had received two bids (M/s ZKB & M/s Techno-CMC-ACC), the meeting was informed. Both bids were able to meet technical qualification requirements as specified in the bid documents. However, the consortium led by M/s Techno offered the best financial terms and was declared as the most advantageous bidder.

Following approval of the PPP contract by the P3A Board, the concessionaire would initiate the financial close process for the project followed by the construction and operations period. The concession period of the project is 25 years, including 30 months construction period and 6 months financial close period, it was informed.