$800m ADB loan for road network upgrade

Facility will help enhance regional connectivity with Central Asia, China

Shahbaz Rana September 27, 2017

ISLAMABAD: The Asian Development Bank (ADB) on Tuesday approved a five-year package worth $800 million for Pakistan to link Central Asia with China through Pakistan described by the lender as the shortest south-north road route and critical to its (bank’s) regional connectivity agenda.

The ADB’s board of directors approved the $800 million multi tranche financing facility (MFF) to enhance regional connectivity and trade in the Central Asia Regional Economic Cooperation (CAREC) corridors in Pakistan, according to an official hand-out.

The loan will be disbursed over a period of five years under three sub-programmes and the country will receive first instalment of $180 million this year.

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“The investment programme will expand Pakistan’s regional connectivity links through road traffic efficiency,” said the local office of the Manila-based lending agency.

“Road networks in Sindh, Punjab and Khyber-Pakhtunkhwa (K-P) will be rehabilitated and upgraded with the MFF’s first tranche,” it added.

The second and third tranches, worth $260 million and $360 million, respectively, are expected to be approved in 2019 and 2021.

The first two tranches valuing $440 million will be fully spent in Sindh to improve the road network in the province while the third tranche of $360 million will be spent in Sindh, Punjab and K-P.

Under the first tranche, the existing Ratodero-Shikarpur road will be expanded to four lanes to smoothen traffic flows.

“Pakistan’s unique geographic location – at the crossroads of Central Asia, the People’s Republic of China, and South Asia – provides a unique potential and opportunity for the country to become a regional transport and trade hub,” said Dong-Soo Pyo, ADB’s Director, Transport and Communications Division, Central and West Asia Department.

“The investment programme will help the government of Pakistan realise this potential, improve trade and connectivity in the CAREC corridors with the long-term goal of achieving inclusive growth and sustainable development in mind,” he added.

However, Pakistan has a poor track record in utilising funds. Half of the ADB-funded projects worth $3.4 billion have either become problematic or put on the watch list due to implementation delays, according to a latest portfolio review.

The transport sector is the second major contributor to Pakistan portfolio representing almost 26% of the active ADB-funded projects.

Pakistan’s trade has been centred on sea traffic while transit trade through the country remains limited as poor and costly transport, and cross-border infrastructure and services hinder the realisation of this untapped potential.

“Upgrading the country’s current 263,000 kilometres of road while ensuring transport safety will be critical to the country’s export competitiveness as well as overall economic growth,” according to the ADB.

The $800 million multi-tranche facility will upgrade and rehabilitate a total of 747km of road along the CAREC corridors.

The investment programme will also focus on strengthening the capacity of the National Highway Authority to carry out due diligence work for subsequent tranches as well as to implement each tranche project under the MFF as designed.

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The National Highway-55 (N-55) offers the shortest north-south bound CAREC spin-off transport corridor through Pakistan to link landlocked Afghanistan, Central Asia and China’s Xinjiang province with Arabian seaports at Karachi and Gwadar.

It starts at M-9 near Petaro in Sindh, traverses through southern part of Punjab and terminates at N-5 near Peshawar in Khyber Pakhtunkhwa.

Currently the N-55 is mostly a two-lane single carriageway which is in a very poor condition and requires upgrading to 4-lane dual carriageway to sustain the presumed future traffic loads from CAREC countries.



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