Private sector to be invited for highway construction

ISLAMABAD: The government is developing a transaction structure to construct and operate 70-kilometre long highway in the Punjab on public-private partnership basis, officials said on Friday.

The project is proposed to augment existing road network in the province of Punjab and will pave the way for launching phase-II of the project taking the motorway further to the city of Rawalpindi, said CEO of the Public Private Partnership Authority (P3A). The project is expected to be floated in the market within this financial year.

P3A is collaborating with and facilitating National Highway Authority (NHA) in the process of developing of the transaction for seeking participation of qualified private sector parties to construct and operate 70 km long 4-lane Sialkot-Kharian highway on PPP basis.

P3A has the mandate to facilitate federal implementing agencies in developing, structuring and procuring their infrastructure projects on PPP basis, and under the P3A (Amendment) Ordinance 2020, the board of P3A is empowered to approve such ‘Qualified’ PPP projects which can demonstrate value for money to the public sector while retaining bankable financial structure for the private sector.

The commercial feasibility study of the project has been completed by NHA. The project is likely to involve injection of upfront capital subsidy by the government to supplement the financial viability and bankability of the project. The government is also engaging with the Word Bank for assistance in the devising of a transaction structure for the project that is capable of offering value-for-money solution to the public sector while allowing a viable structure for the private sector participation.

The project has been approved by Central Development Working Party and has been recommended for approval to the Executive Committee for the National Economic Council.

PPPs in the road sector are an established mode of service delivery worldwide. Pakistan also has been successful in attracting significant private sector participation in building and operating road infrastructure on PPP basis.

P3A has so far identified seven projects, which are in their advance stage of their preparation, as early harvest projects. They include construction of Sukkur-Hyderabad motorway, Sialkot Kharian motorway, bedded teaching and research hospital, science and technology park, Karachi circular railways, conversion of Lahore state guesthouse into high-end hotel and upgradation/ dualisation of Karachi Pipri rail track.

In 2006, the government established infrastructure project development facility through ministry of finance to provide advisory and facilitation services to ministries and other autonomous bodies to structure, develop and procure infrastructure projects through public private partnerships.

Through Public Private Partnership Authority Act, 2017, the infrastructure project development facility was converted into the P3A. The act mandated the authority to establish a regulatory framework to attract domestic and foreign private investment in the development of public infrastructure through transparent and fair procurement process.