ECC okays Rs48b for motorway, PTV

The government on Tuesday approved Rs34.6 billion in sovereign guarantees for the construction of the Sialkot-Kharian motorway, by a subsidiary of the Frontier Works Organisation, and a Rs13 billion supplementary grant for Pakistan Television Corporation (PTV) to cover salaries and operational expenses.

The Economic Coordination Committee (ECC), virtually chaired by Finance Minister Muhammad Aurangzeb, approved the Rs13 billion grant for PTV, according to the decision. The Ministry of Information and Broadcasting had demanded Rs20 billion to pay allowances, utility charges, salaries and other essential expenses. However, the ECC decided to release Rs13 billion in quarterly tranches of Rs3.25 billion.

A finance ministry handout stated that the committee approved the release of funds quarterly to enable PTV to meet its operational and essential running expenses. The committee further directed the ministry to bring the matter back to the ECC within two months, along with a comprehensive financial sustainability plan for PTV.

PTV is registered under the Companies Act, but Information Secretary Ashfaq Ahmad Khalil also serves as its Managing Director. According to a recent finance ministry report, PTV's revenues plunged 22% to Rs14.3 billion in FY2024-25. The corporation incurred a net loss of Rs639 million, making it the 20th highest loss-making public sector firm, showed the report released by the Central Monitoring Unit of the SOEs a few months ago.

. Its cumulative losses have jumped to Rs20 billion as of June last year.

Motorway guarantees

The ECC also approved Rs34.6 billion in sovereign guarantees for the 69-kilometre Sialkot-Kharian motorway project, awarded to M/s Sialkot Kharian Infrastructure Management Private Limited – a subsidiary of Frontier Works Organisation (FWO) – in September 2021 under a public-private partnership model.

The approval includes Rs17.4 billion for capital viability gap funding, Rs10.3 billion for commercial debt, and nearly Rs7 billion for operational viability gap funding. The official statement added that the ECC approved the issuance of sovereign guarantees amounting to Rs27.62 billion and the rollover of already issued operational VGF amounting to Rs6.944 billion. The guarantees will facilitate the concessionaire in achieving financial close for the project in line with the approved fresh financing structure, it added.

The total financing requirement for the project is Rs89.7 billion, including Rs45.7 billion from the federal government and Rs44 billion to be arranged by the concessionaire, which is the FWO subsidiary.

The government has already revised the PPP agreement with the FWO subsidiary in February this year, requiring the company to achieve financial close within six months. The financing structure was revised due to increased construction costs, inflation, higher interest costs and project scope changes. The concession period has been extended from 25 to 29 years. The company will charge a minimum toll of Rs4.1 per kilometre for cars, nearly Rs10 for mini-buses, Rs13.7 for large buses and Rs23 per kilometre for large trucks during the first year of operation.

The traffic count on the road is about 23,700 vehicles per day. The government has guaranteed it would absorb interest costs exceeding 12% during commercial debt repayment and recover money if rates fall below 10%. The construction company will pay 7% of gross revenues to the National Highways Authority (NHA) from the 11th year of operations or on expiry of the debt servicing period. However, in case of windfall gains, the NHA will get 75% of annual excess gross revenues.

The finance ministry estimates it will issue new guarantees of Rs683 billion from April 2026 to June 2027 against various projects and government-owned entities. The existing stock of sovereign guarantees is Rs4.4 trillion, projected to cross Rs5 trillion by June next year.

Sovereign guarantees are indirect liabilities the government covers if the main entity defaults. Of the total stock, over half – Rs2.4 trillion – have been issued in favour of the power sector, while Rs895 billion have been issued against various commodity operations.