The government on Tuesday approved over a dozen mega projects worth Rs1.3 trillion, many of which were already under implementation but have seen significant cost escalations. Among them is the construction of a new federal-funded motorway in Punjab, now costing Rs436 billion.
The Executive Committee of the National Economic Council (ECNEC), the country's top project approval authority, sanctioned these projects, including major infrastructure developments and a satellite initiative. Chaired by Deputy Prime Minister Ishaq Dar, ECNEC approved 13 schemes, including two flood-related projects in Sindh.
According to a statement issued by the Deputy PM's Office, these 13 projects span key sectors, including transport, communications, railways, space technology, and public infrastructure. The Rs1.3 trillion allocation exceeds this year's annual federal development budget, with some new projects also receiving provincial funding.
Among the most significant approvals was the Lahore-Sahiwal-Bahawalnagar Motorway, stretching 295 kilometres. Initially approved in August 2023 for Rs264 billion, its cost has now increased by 65% to Rs436 billion. Despite severe resource constraints, the federal government is proceeding with the project, even though it begins and ends in Punjab. The National Fiscal Pact, signed under the International Monetary Fund's (IMF) directives, prohibits such projects from being federally funded. In January, Prime Minister Shehbaz Sharif instructed the Punjab government to finance at least half of the motorway's cost, but no final decision has been made.
ECNEC was informed that 90% of the land acquisition for Package-I of the motorway is complete. The National Highway Authority (NHA) has been permitted to commence construction from Lahore Ring Road to Raiwind-Kasur Road Interchange through Public Sector Development Program (PSDP) funds, based on the originally approved PC-I. Additionally, NHA will reassess the alignment to integrate with existing motorways, per discussions held in a meeting chaired by the PM in January. It was further decided that the NHA would re-engage with the Punjab government to secure 50% of the total project cost. With only Rs1.1 trillion allocated for 1,071 ongoing projects, and amid tax revenue shortfalls, new projects will further strain the already limited resources. Even the Rs1.1 trillion development spending is at risk of deep cuts.
Pakistan Optical Remote Sensing Satellite (PRSS-O2) ECNEC approved the Pakistan Optical Remote Sensing Satellite (PRSS-O2) project at a revised cost of Rs19.5 billion. The project is 85% funded by a Chinese concessional loan. PRSS-O2 will feature an optical payload capable of capturing high-resolution earth imagery in a panchromatic band.
Sindh flood emergency rehabilitation
ECNEC sanctioned the revised cost of Rs88.4 billion for the Sindh Flood Emergency Rehabilitation Project (SFERP) Phase-I, an increase of Rs22.4 billion or 34%. The project aims to restore roads, water supplies, drainage systems, and improve food security and livelihoods across Sindh. Originally approved in December 2022 at Rs66 billion, the World Bank is financing the project with a $288 million loan. ECNEC has mandated photographic documentation and GPS coordinates of post-flood damages to ensure transparency in fund utilisation.
The SFERP initially provided financial aid to over 2.2 million displaced households through cash-for-work programmes, labour kits, and grants for infrastructure rehabilitation. The cost revision is largely due to an increase in the road component, which rose from Rs22 billion to Rs37 billion. ECNEC also approved an additional Sindh Flood Irrigation project, valued at Rs33 billion.
Rawalpindi Ring Road Project
The cost of the Rawalpindi Ring Road (R3) project has increased by 40% to Rs33 billion. Originally approved in December 2021 at Rs23.6 billion, the revised project includes a 38.3-kilometer, six-lane access-controlled expressway. The Housing, Urban Development, and Public Health Engineering (HUD & PHED) Department of Punjab had increased administrative approval to Rs27 billion in February 2022, without altering the project scope.
However, the latest revised PC-I shows costs rising further due to design modifications. The number of culverts has increased from 33 to 49, underpasses from 4 to 10, and bridges and flyovers from 19 to 26, exposing poor planning in the original 2021 approval.
Railway expansion and road rehabilitation
The government approved a revised PC-I for procuring 820 railway bogie wagons and 230 passenger coaches, increasing the project cost by 129% from Rs31 billion to Rs71 billion. The completion timeline is set for June 2027.
Additionally, ECNEC approved the Multan-Vehari Road project at a cost of Rs12.9 billion, which involves rehabilitating 93.5 kilometres of road to standard carriageway specifications.
Green line bus rapid transit system
The Rs13.5 billion Green Line Bus Rapid Transit System (BRT) project was also discussed. ECNEC granted administrative approval to facilitate Sindh Infrastructure Development Company in clearing liabilities before transferring operations to the Sindh government. However, the issue of increasing Green Line fares remains unresolved and has been left to the Sindh government's discretion.
Public-private partnerships, additional approvals
ECNEC sanctioned Rs28 billion for enhancing Public-Private Partnerships. The Sindh government has been directed to complete all project activities by June next year to avoid further commitment charges on unused Asian Development Bank (ADB) loans.
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