K-P to pay Rs15 billion interest on BRT loan

Peshawar BRT project to kick off on Oct 19

PESHAWAR: Despite Pakistan Tehreek-e-Insaf (PTI) chairperson Imran Khan’s criticism on foreign loans taken by the federal government, the PTI led Khyber-Pakhtunkhwa (K-P) government has agreed to a deal where they will be paying Rs15 billion in interest alone.

The Asian Development Bank and the K-P government have signed an agreement, for the former to release a loan of Rs35 billion - to be paid off over a 20 year period - for building a Bus Rapid Transit (BRT) system in Peshawar.

The total amount needed for the BRT comes to over Rs61.8 billion and the project will be inaugurated on 19th of October.



According to the loan agreement documents, a copy of which is available with The Express Tribune stated that ADB has approved over Rs35 billion to be given for executing the BRT project to the borrower (K-P government) for a principal repayment period. The K-P government, according to the agreement, will pay interest at the Libor rate.

Currently, the Libor interest rate for a 20 year loan is 2.64% annually, against the total loan payment while 0.10% is the annual maturity premium, followed by a 0.15% commitment charge, which brings the total to almost 3%.

According to the interest rate, the K-P government is supposed to pay ADB an amount of around Rs51 billion, including both the principal amount and the interest. The loan agreement will start biannually from August 2022 starting from repaying 1.75% of the total loan which will later be increased to 3% and by 2042 all the repayments will be completed.

The document also says that during the implementation period of the project, 2017 to 2021, a total of Rs1.4 billion will be paid to the ADB as interest against the withdrawal amount.

The document has a payment schedule specified for this period as well, where the K-P government will receive Rs2.5 billion in 2017, Rs15.5 billion in 2018, Rs12.2 billion in 2019, Rs2.7 billion in 2020 and Rs2 billion will be given for the project’s execution in 2022.



Other than the ADB, a loan of $150 million will be taken from Agence Française de Development (AFD) and the European Investment Bank (EIB) while the rest of the amount will be afforded by the K-P government.

According to details, the BRT in Peshawar will be accessible to 17 per cent of the city's total population or around 500,000 individuals. According to the plan, BRT routes will be extended beyond the corridor to provide ease to the population living in urban areas of the city.

The proposed BRT corridor is located in a busy part of the city and will be ideal for daily commuters. K-P Finance Minister Muzafar Said was frequently contacted for comment but he could not be reached.