Gwadar Expressway cost capped at $168m

The step removes last irritant to the signing of a loan deal during PM’s upcoming visit to Beijing

ISLAMABAD: The Executive Committee of National Economic Council (ECNEC) on Wednesday capped the cost of the Gwadar Expressway at $168 million, which is 25 per cent higher than the cost approved previously, removing the last irritant in the way of the signing of a loan agreement in China during an upcoming visit by Prime Minister Nawaz Sharif.

The ECNEC approved the revised Investment Control Cost of the Gwadar Expressway -- which forms part the China-Pakistan Economic Corridor -- overturning its two-and-half-year-old decision to approve the project at $134.2 million.

It also approved the Financial Inclusion and Infrastructure project at a cost of $137 million despite serious reservations raised by the Planning Commission over the scheme’s planning and proposed execution.



Pakistan will obtain $137 million loan from the World Bank for executing the project and a significant portion of the loan will be used up in paying consultancy fees in the name of expanding access to finance for small- and medium-scale enterprises.

The Eastbay Expressway Project envisages building a 19km-long road, connecting the Gwadar Port with the Makran Coastal Highway.

Since China is providing interest-free loan for the project under CPEC, contracts will be awarded in government-to-government mode, waiving the condition of international competitive bidding.

The China Communication Construction Company, the China State Engineering Construction Company and the CATIC Civil are vying for the project.

However, the project’s financing agreement is yet to be signed. The ECNEC gave the approval of the revised cost so that Prime Minister Sharif may sign the project agreement on the sidelines of a One-Belt One-Road summit being held later this week in Beijing.

According to officials, although the maximum project cost was capped at $168 million, the actual cost would be determined after the bidding process. The project is part of $11 billion worth of infrastructure projects related to the CPEC.



Financial Inclusion project

The ECNEC also approved in principle the financial inclusion project at a cost of $137 million. The project has been prepared on the insistence of the World Bank and other global lenders. The main objective of the project is to implement the National Financial Inclusion Strategy for providing access to financial services to half the country’s population by 2020.

According to the Planning Commission, the Finance Ministry got the project approved at a cost of Rs14.3 billion and that too by obtaining a loan “without conducting any feasibility study” as to the viability of the scheme.

The sustainability mechanism of activities to be executed under the project has not been provided in the PC-I document, says the Planning Commission. Even the interest rate, payback period of the loan and its terms and conditions had not been mentioned in the PC-I document, demonstrating the Finance Ministry’s ill-planning.

The Planning Commission was not given enough time for the project’s technical evaluation as its documents were submitted at 7pm on May 8.

Moreover, the Finance Ministry wants to carry out some activities under the project, already being carried out under another project.

The Planning Commission also objected to Rs238 million consultancy cost built in the project and the purchase of two vehicles in the name of national financial inclusion.



“ECNEC directed that a committee headed by the secretary Planning and Development will rationalise the cost and scope of the financial inclusion project,” a Finance Ministry statement said after the ECNEC meeting.

Despite no allocation in the budget, the ECNEC also approved a link road for connecting Sheikupura and Narowal with the under-construction Lahore-Sialkot Motorway project. The project’s total cost is Rs14.2 billion.