WB approves $130m to cover cost overruns
With the additional financing of $130 million, the total cost of the Pakistan Highway Rehabilitation Project crosses $600 million. The original cost was $474 million.
Of the $130 million, $20 million is part of the $1 billion flood relief package announced by the World Bank. Pakistan will return the loan over the next 40 years and pay an interest of 0.75 per cent.
The government had requested additional funds against those projects that have been facing cost overruns. The loan proceeds will be utilised for rehabilitation and improvement of highways and also for resettlement of flood survivors and land acquisition.
Development projects are mostly approved on political considerations, instead of economic benefits. This has resulted in a backlog of 1,900 projects involving Rs3 trillion.
Unwanted approvals have divided already thin resources and, according to some estimates, it will take at least five years to complete the ongoing schemes if no new projects are aapproved.
Transport is the fourth largest sector which contributes 12 per cent to the overall economic growth and employs about 2.3 million people. With deteriorating performance of the Pakistan Railways, the road sector has progressively increased its share in the market.
The road sector now carries over 96 per cent of inland freight and 92 per cent of passenger traffic. In 1980, the railway network used to transport about 41 per cent of total passengers and 73 per cent of freight traffic.
The highway rehabilitation project consists of three components, rehabilitation of 514 kms of highways, resurfacing of 342 kilometres of highways and reconstruction of 128 kilometres of damaged roads that provide vital access to remote and disaster-prone communities.
The World Bank says the additional financing will help create a productive and efficient highway network, easing transportation bottlenecks and costs, particularly crucial in light of the tremendous damage caused by the recent floods.
“Improvements in basic infrastructure including highways are critical to improving human development outcomes,” said Rachid Benmessaoud, World Bank Country Director for Pakistan.
“With growth there has been an increase in demand for a better infrastructure. However, the infrastructure needs significant investment in order to support growth and service delivery goals.”
The World Bank said stretches in poor condition have been reduced by 20 per cent, travel time between Peshawar and Karachi reduced by nine per cent and road fatalities reduced by a notable 44 per cent.
“This continues to be a very important project,” said Zafar I Raja, project team leader. “We are committed to continually improving the three impact indicators – reduction in average vehicle operating costs; reduction in travel time and improvement in road safety,” he added.
Published in The Express Tribune, September 30th, 2010.
COMMENTS
Comments are moderated and generally will be posted if they are on-topic and not abusive.
For more information, please see our Comments FAQ