Lowari project 362% over budget

ISLAMABAD:

The Lowari Tunnel project, initially approved over two decades ago to ensure all-weather and safe access to the northern parts of Pakistan bordering Afghanistan, has become a symbol of poor planning. It is once again under review for a fifth increase in its cost, now estimated to be 362% higher than the original price.

The Central Development Working Party (CDWP)—the body mandated to approve development projects worth Rs7.5 billion and to recommend more expensive schemes to the Executive Committee of the National Economic Council (ECNEC)—this week considered a proposal to raise the project cost to Rs37 billion.

There was no consensus in the meeting, as the project documents presented to the CDWP by the Ministry of Communications violated a three-year-old government instruction to cap the project's cost at Rs28 billion and formally close it, according to a senior official from the Ministry of Planning.

The Ministry of Communications requested an additional Rs10 billion in funding, but the Planning Commission agreed only to a Rs4 billion allocation to settle pending liabilities, said the officials.

Back in 2022, the ECNEC had approved the project with a total cost of Rs28 billion, which the ministry now wants to revise upward to Rs37 billion. This marks the fifth cost increase—now 362% higher than the Rs8 billion originally approved in 2004. The cost escalation has been driven partly by the government's repeated decisions to expand the project's scope over time.

The Lowari Tunnel is a key component of the National Highway (N-45), connecting Nowshera, Malakand, and Chitral. The tunnel, now constructed, was intended to provide a year-round, all-weather road link to Chitral district and surrounding northern areas of Pakistan, which were historically isolated during the winter months due to heavy snowfall.

Following the latest review, the CDWP returned the project to the Ministry of Communications, instructing it to revise the proposal in line with the Rs4 billion worth of outstanding liabilities and present a new version for submission to the ECNEC.

Three years ago, ECNEC had ordered a fact-finding inquiry and directed that the project be formally closed. However, neither instruction has been honoured by the Ministry of Communications.

An official statement by the Ministry of Planning after the CDWP meeting made no mention of the Lowari Tunnel project.

The original PC-I of the Lowari Tunnel project envisioned the construction of an 8.6-kilometre-long mini electric rail tunnel designed to facilitate piggyback shuttle services for transporting loaded cargo trucks from one portal to the other. This plan was approved by ECNEC on July 27, 2004, at a cost of Rs8 billion.

Subsequently, it was decided to convert the already excavated rail tunnel cavity into a road tunnel. With this revised scope, the PC-I was updated and approved at Rs18.1 billion by ECNEC on November 11, 2011. On October 31, 2012, a decision was made to widen the carriageway from six meters to 7.5 meters to improve vehicular safety and traffic flow.

A second revised PC-I was submitted on October 22, 2014, reflecting the increased carriageway width of 7.5 meters, which allowed for a full-width road of 3.1 meters along with related infrastructure. The second revised PC-I was then approved by ECNEC on August 22, 2016, at a total cost of Rs27 billion.

Despite Pakistan's limited financial resources, politically driven development schemes frequently often cause an increase in the numbers of projects to be funded from the Public Sector Development Programme (PSDP), often resulting in cost overruns and delays. To manage the burden, some projects have been dropped to create space for more politically oriented schemes.

Nevertheless, even amid fiscal constraints, the government continues to approve and fund new projects—sometimes fully or substantially financing those that fall within provincial jurisdiction—in breach of the National Fiscal Pact signed with provinces under the International Monetary Fund (IMF) programme.

Other projects

The CDWP approved seven other development schemes during the same meeting. Three of these, collectively worth Rs10 billion, were approved at the CDWP level, while four others, with a total cost of Rs91 billion, were forwarded to the ECNEC for final approval.

Among the approved projects is the Rs5 billion Gwadar Safe City initiative. The federal and provincial governments will share the cost equally. This project aims to improve public safety in Gwadar, and its revised PC-I incorporates feedback from all relevant stakeholders to rationalise its components.

The CDWP also recommended a new road project in Sialkot at a cost of Rs13 billion. Like the Gwadar project, it will be jointly funded by federal and provincial governments, even though federal funding for provincial schemes contravenes the National Fiscal Pact. The project aims to enhance connectivity between Sialkot city and the National Highway (N-5) by constructing a 7-kilometre dual carriageway to Ghatto Rora, followed by dualization of the remaining single carriageway.

Another scheme—the Rs16.2 billion upgradation of the Jhaljao–Bela Road—was referred to the ECNEC for further review. The project involves rehabilitation of an existing two-lane road to improve transport efficiency and road safety in the area.