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Saturday January 28, 2023

Sukkur-Hyderabad motorway construction agreement signed

By Our Correspondent
December 03, 2022

ISLAMABAD: The concession agreement for the construction of the Sukkur-Hyderabad motorway project, which was earlier approved by the P3A Board at a cost of Rs307 billion, was signed today in Islamabad between National Highway Authority (NHA) and the contractor.

Under the transaction structure approved by the P3A Board, GoP will contribute only Rs9.5 billion over the construction period while the remaining project cost of Rs297.5 billion would be borne by the private party through equity and commercial debt. The private party will also pay minimum Rs408 billion to the NHA and estimated corporate taxes of Rs908 billion over the concession period. In addition, the project will be transferred to the NHA at no cost at the end of the concession period.

The motorway commonly, known as M6 Motorway, is the largest project under the PPP umbrella signed in the history of the country. The project was structured by the federal Public Private Partnership Authority (P3A) under the Build-Operate-Transfer (BOT) mode in collaboration with the NHA. The motorway spanning over a length of 306 kilometers will comprise six lanes. Designed to be constructed as a climate resilient project, the private party shall construct and operate the project for 25 years commencing from the date of execution of the agreement.

Given the shrinking fiscal space and the prevalent economic crunch, the project is a landmark achievement in the PPP sphere. The P3A team closely worked with the NHA to make the project a success. The project will complete the missing link of north-south (Peshawar-Karachi) motorway network. The project is expected to bring economic benefits in terms of saving significant travel time, travel costs, and lifting socio-economic profile of the region.

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