ECNEC approves Rs361b projects

Nearly all projects presented to committee again due to cost overrun

Shahbaz Rana May 27, 2021
Federal Finance Minister Shaukat Tarin addressing a presser in Islamabad on April 23, 2021. SCREENGRAB


The government on Wednesday approved nine mega development projects at a cost of Rs361 billion and almost all of them were brought for the second time before a project approval authority due to cost overruns and weak execution.

Federal Minister for Finance Shaukat Tarin virtually chaired the meeting of the Executive Committee of National Economic Council (Ecnec), which gave approval to all the projects, including the 306km-long Hyderabad-Sukkur motorway to be built with support of the private sector.

The construction of Hyderabad-Sukkur fenced motorway on build, operate and transfer (BOT) basis was approved by Ecnec at the revised PC-I cost of Rs191.5 billion, said the Ministry of Finance. The project would be implemented on BOT - user-charge basis with provision of capital and operational Viability Gap Funding (VGF) to improve financial viability of the project, it added. The project is expected to be completed in two and a half years.

The motorway project was initially expected to be completed at a cost of Rs165 billion, which has now been increased by 16% or Rs26.5 billion.

The China-Pakistan Economic Corridor (CPEC) route that traverses Islamabad-Lahore motorway (M2), Pindi Bhattian-Faisalabad-Multan motorway (M4), Lahore-Abdul Hakeem-Multan-Sukkur-Hyderabad-Karachi motorway network, known as the eastern corridor, connects ports of Karachi and Gwadar.

The Hyderabad-Sukkur motorway was a missing link, having 306km length, which the National Highway Authority (NHA) will build through private sector participation to complete the north-south link of the eastern corridor.

The government approved the provision of Rs92 billion from the budget and through toll charges to make the Hyderabad-Sukkur motorway project financially viable and attractive for private parties. Initially, the share of federal government was only 0.7% or Rs1.1 billion. But its share has been increased after it decided to pick overhead charges like escalation cost of Rs12 billion, contingencies of around Rs3 billion and interest during construction of Rs8 billion.

The contractor will collect the toll from commuters for 25 years and the first year toll rate will be Rs860 per car, which the contractor will be allowed to increase 7.5% annually. Ecnec approved the grant of Rs43 billion from the budget during the construction period as capital injection and another Rs49 billion as operational VGF with Rs7 billion per annum for the debt service period of seven years, according to the decision.

Ecnec approved the Gomal Zam Multipurpose Project for the third time at a revised cost of Rs25.9 billion. It also granted ex-post facto approval for expenditures and financial close of the project by relaxing the direction of the earlier Ecnec meeting held on August 28, 2013.

The project is located on the Gomal River in South Waziristan, Khyber-Pakhtunkhwa. The main objective of the project is to harness flood water and provide assured irrigation water supply of 848 cusecs to irrigate 191,139 acres of land including 28,053 acres of additional land, which falls under the Warman Canal System, and to generate 17.4 megawatts of electricity.

The Covid-19 Response and Other Natural Calamities Control Programme (Sindh component) was approved at a total cost of Rs20.8 billion. The project will be completed on equally shared financing basis by the government of Sindh and the federal government through the PSDP. It is expected to be completed by the end of 2023.

The project envisages strengthening the provincial health system to effectively respond to the pandemic-like situation at THQ and DHQ hospitals. Ecnec also decided that any escalation in the cost of the project would be borne by the provincial government.

Ecnec gave approval to the 30MW Ghowari hydropower project, again for the third time, at a total cost of Rs16.4 billion. The project is expected to be completed in four years.

The 20MW Hydropower Project Hazel, Gilgit was also approved by Ecnec at a revised PC-I cost of Rs12.9 billion. The revised PC-I of Rainee Canal Project (Phase-1: 110 km) was approved by Ecnec at a total cost of Rs20.5 billion. The Water and Power Development Authority (Wapda) is responsible for execution of the project, which will irrigate 412,400 acres in phase-I with designed discharge of 5,500 cusecs in Kashmore, Ghotki, Sukkur and Khairpur districts.

Frequent revision in the scope and cost of the projects points to faulty decision-making as the projects are often pushed for approval without due diligence. Serious objections raised by the departments concerned are often ignored at the approval stage due to political compulsions, which then leads to cost escalation and poor execution.

The Central Development Working Party on Monday approved a Rs312 billion stunting programme while ignoring the serious objections raised by the Planning Commission.

The construction of Hoshab-Awaran-Khuzdar section of M-8 project; Section 2 of Awaran-Naal with a length of 168 km was approved by Ecnec at a rationalised cost of Rs32.2 billion, according to the finance ministry. The Khyber-Pakhtunkhwa Provincial Roads Rehabilitation Project “Under PKHA Portfolio” was approved by Ecnec at a revised PC-I cost of Rs28.2 billion.

The revised PC-I of the project envisages rehabilitation of 274 km of the existing provincial highway network of Khyber-Pakhtunkwa as compared to the original scope of 214 km.

Tarin directed the Planning Commission to prioritise projects that were strategic in nature or could be completed in a shorter period of time to save the exchequer from cost overruns and unnecessary delays, said the Ministry of Finance.

The feasibility and dualisation of Mardan-Swabi Road was approved by Ecnec at a revised PC-I cost of Rs13.1 billion.

Published in The Express Tribune, May 27th, 2021.

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