Government clears $2bn CPEC road project

Islamabad:

The government on Thursday approved the construction of another road project under the China-Pakistan Economic Corridor (CPEC) at a cost of $2 billion, paving the way for the signing of the framework agreement during Prime Minister Shehbaz Sharif’s visit to Beijing next week.

The Central Development Working Group (CDWP), the body empowered to recommend major schemes for higher forum approval, has approved the construction of the 241-km Thakot-Raikot section of the Karakoram Highway, according to a statement from the Ministry of Planning after the meeting. .

The CDWP approved the project at a cost of Rs 567.5 billion or $2 billion, with the direction that the price should be further reduced by streamlining overheads.

The Karakoram Highway was originally built with the help of China about 50 years ago and due to the difficult terrain, dozens of people died during the construction phase. A fully functional all-weather Karakoram Highway is critical to China-Pakistan economic and trade relations. This is the third major road infrastructure project the two nations intend to build under the CPEC, after the Multan-Sukkur highway and the Havelian-Thakot section of the Karakoram Highway.

Planning Commission Deputy Chairman Dr Jehanzeb Khan presided over the CDWP meeting. Khan’s position in the government may be further strengthened after the budget due to some administrative changes that Prime Minister Sharif’s government is considering implementing.

Pakistan and China have already agreed to complete the remaining missing link of over 800 km of Karakoram Highway during the 10th meeting of the Joint Cooperation Committee. The missing link, 241 km long, is planned to be built with a Chinese soft loan, according to officials of the Ministry of Planning.

Of the $28 billion investment under CPEC so far, $6.7 billion has gone into infrastructure projects.

Last week, Pakistan asked Beijing to fund nine more projects under the $17 billion CPEC, including the missing road link.

However, the project has been cleared without its economic and financial analysis. The planning ministry pushed for the approval of the project in a hurry as it received the project documents just a day before the CDWP meeting. China has prepared the joint feasibility study of the project and shared its main findings with Pakistan last month. However, Chinese authorities have not yet provided an item-by-item breakdown of all items, nor back-up quantities for their internal work, according to Ministry of Communications officials.

Planning Minister Ahsan Iqbal had directed the National Highways Authority (NHA) to conduct a third-party validation of the project cost by a Pakistani consultant. However, the CDWP was informed that it may take two months to hire a consultant and another three months to validate the findings of the Chinese report.

Since the PC-I is a condition for signing the framework agreement during the prime minister’s visit, the NHA said the project is reasonably priced, but bidding will be done only after third-party validation, according to communications ministry officials. The CDWP cleared two projects worth Rs 609.5 billion on Thursday, including the road programme. The Executive Committee of the National Economic Council (ECNEC) will now take up the matter for its final approval.

PC-I of the project envisages upgradation, improvement and alignment of KKH road from Thakot to Raikot Bridge. The project includes upgradation of KKH from Thakot to Dasu with bypass road, exclusive relocation of KKH to Dasu dam being done by WAPDA, upgradation of existing road from Sazin to Thor Nullah & R-1 and new construction of KKH after Basha. The project will be completed in five years, the urban planning ministry said.

If China agrees to finance the project, it will be completed in a mechanized procurement and construction manner and will also require federal cabinet approval. There were also issues of project funding from the Public Sector Development Program (PSDP), as NHA’s funding requirements for ongoing projects have already reached Rs 1.7 trillion. The country also needs Rs 250 billion annually if it wishes to complete CPEC’s Mainline-I project in the next eight years.

The CDWP also approved the increase in the cost of the Golden Gol Hydropower Project, which has a generating capacity of 108 megawatts. The price rose to Rs 42 billion. The project is funded through the OPEC (Organization of the Petroleum Exporting Countries) International Development Fund, the Saudi Arabian Development Fund, the Kuwait Fund for Arab Economic Development and the United States Agency for International Development (USAID).

The main objective of the project is the construction of a 108 MW hydroelectric project with an annual energy efficiency of approximately 476 GWh.

Published in The Express Tribune, May 31^St2024.

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