World Bank to provide $406.6m loan to Pakistan for KPEC project

ISLAMABAD: Pakistan and World Bank on Friday signed loan agreement of $406.6 million for Khyber Pass Economic Corridor (KPEC) Project.

In another separate grant agreement, Pakistan and Germany signed grant agreement for Hydropower and Renewable Energy Phase-II worth Rs2145.29 million.

According to official announcement made by Economic Affairs Division, Minister for Economic Affairs Muhammad Hammad Azhar witnessed the signing ceremony of financing and project agreement of Khyber Pass Economic Corridor Project (KPEC) worth US $406.6 million with the World Bank, held today in Economic Affairs Division.

The project aims to construct 48 km long 4-Lane, dual carriageway high-speed access controlled motorway, from Peshawar to Torkham. This project will promote economic development and uplift areas adjoining expressway falling in Khyber Pakhtunkhwa province. The project envisages the use of PPP and private financing to develop clusters of economic activity, economic zones and expressways. The connecting transport infrastructure and economic zones will provide a strong foundation for private businesses to invest in these zones.

The global integration of South and Central Asia is intertwined with the Khyber Pass and has served as the key node in trade for hundreds of years. The expressway between Peshawar and Kabul through the Khyber Pass represents a section of Corridors 5 and 6 of the Central Asia Regional Economic Cooperation (CAREC). Corridor 5, which runs through Pakistan, has the potential to provide the shortest link between the landlocked countries of Afghanistan, Tajikistan, Uzbekistan and the Arabian Sea. Corridor 6 provides access to Europe, Middle East and Russia. The KPEC will finance Peshawar-Torkham expressway portion of Corridor-5. The Peshawar-Torkham expressway will reduce transit time and costs for regional and international trade transiting the Khyber Pass and extend till Karachi - Lahore - Islamabad - Peshawar Trans-Pakistan Expressway System. It will form as an integral part of the planned Peshawar - Kabul - Dushanbe Motorway. The improved regional connectivity through this corridor will not only facilitate the commercial traffic and expand economic activities between Pakistan and Afghanistan but also promote private sector development along the corridor. It is expected to generate up to 100,000 new jobs in Khyber Pakhtunkhwa.

In another agreement with Germany, Muhammad Hammad Azhar Federal Minister for Economic Affairs witnessed the signing of Financing Agreement for Hydropower Renewable Energy-II. Dr. Syed Pervaiz Abbas, Secretary Economic Affairs Division and Wolfgang Moellers, Country Director German Development Bank (KfW) signed the agreement.

Under the agreement, KfW will provide grant assistance worth €12.5 million to the government of Gilgit-Baltistan and Aga Khan Rural Support programme.