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Pakistan seeks $1.7bln road investment in public-private push

By our correspondents
June 25, 2016

ISLAMABAD: Pakistan is seeking foreign investors for a $1.7 billion road project, a senior official said, as the South Asian nation looks to the public-private partnerships (PPPs) to help fund badly needed infrastructure projects.

Pakistan is embarking on the biggest road-building programme in its history, with Prime Minister Nawaz Sharif putting infrastructure projects at the heart of efforts to expand trade and speed up economic growth.

Officials say road projects worth 850 billion rupees ($8.1 billion) are due to be completed in the next three years, which they expect to boost growth by 1-1.5 percentage points per year.

A consortium of Pakistani banks has raised $1.5 billion for several motorway projects and the government is seeking investors for a $1.7 billion public-private concession to build and operate a 296-km highway between Hyderabad and Sukkur.

Shahid Ashraf Tarar, chairman of the National Highway Authority, said Pakistan wants to do more public-private deals which do not add to government debt due to a constitutional limit on borrowing.

"We have to find creative investments in road infrastructure," Tarar told Reuters in Islamabad.

"We are trying to make this road infrastructure self-sustainable over a period of time and not a burden to the government of Pakistan.”

"Tarar said Chinese investors and a Euro-Asian consortium have expressed interest in the $1.7 billion Hyderabad-Sukkur project but the concession will first have to be advertised."

He said public-private projects in Pakistan would see investors build the highway, operate it and make money mostly through tolls, before returning it to the government.

The life span of the concession is expected to be 20-30 years.

Pakistan´s economy is growing at the fastest rate in eight years but foreign investors have remained wary about taking the plunge in a nation which has been racked by economic turmoil and Islamist attacks over the past decade.

The economy is also likely to receive a boost from a $46 billion China-Pakistan Economic Corridor (CPEC) project, including about $4.5 billion towards road infrastructure.

Tarar said local banks investing $1.5 billion in PPP projects should intrigue foreign investors.

"If it´s profitable for local banks that should be a good enough incentive for foreign investors to look at our projects with interest," he said.

About 95 percent of freight in Pakistan is moved by roads as the colonial-era rail network has crumbled due to chronic under investment.  Roads also account for 90 percent of passenger traffic in the country of 190 million people.