Work delayed: ADB stops loan for key portion of Pakistan-China road link

Bank objects to compensation policy for land acquisition.

ISLAMABAD:

Work on a significant portion of the north-south corridor, essential for creating a road link between China and Pakistan, faces a delay, as the Asian Development Bank (ADB) is reluctant to provide a $500 million loan due to differences over land acquisition practices, a top government official has said.

Briefing the Senate Standing Committee on Finance, National Highway Authority Chairman Hamid Ali Khan on Wednesday reassured the senators that efforts were under way to remove bottlenecks hampering the construction of the 110 kilometre Hassanabdal-Havilian-Mansehra road. The link will connect south to north up to Khunjerab Pass, bordering China and Pakistan.



Hasan Nawaz Tarar, Secretary of the Ministry of Planning, told the panel that Pakistan and China had signed a memorandum of understanding for creating linkages between the two countries during the recent visit of the Chinese premier.

General Shahid Niaz, Member Implementation and Monitoring of the Planning Commission, said work on this project was also under way with Chinese assistance.

The ADB’s problem

Khan said Pakistan was seeking a loan of $500 to $600 million from the ADB for construction of the road. China is also extending a $70 million grant to construct parts of the network in Gilgit-Baltistan.

But Khan said the ADB was reluctant to accept Pakistan’s land acquisition policy, which allows payment of compensation only to the legal heirs of a landowner. The ADB has asked the government to pay the affected individuals without considering whether they are legal heirs or not.

If the government accepts the ADB’s stance, the cost of land will increase manifold, as the bank also insists on paying a higher price than the rates determined under local laws.

Khan disclosed that an ADB mission would arrive by the end of June and the matter would be taken up on a priority basis.

This is not the first time that the ADB’s land acquisition policy has come in the way of the early execution of a project. Earlier, the bank had expressed similar concerns about the land acquisition for Diamer Bhasha Dam.

The 2010 landslide resulting in creation of Attaabad lake is also a stumbling block in the way of the project.

The standing committee, headed by MQM’s Nasreen Jalil, asked the government to construct a tunnel at Khunjerab Pass aimed at ensuring a smooth flow of traffic, particularly in winter when roads are blocked by heavy snow.

Tax proposals

The committee also continued discussions on the government’s taxation proposals in the budget for the third day in a row. It unanimously recommended that the government suspend all tax measures that have been given effect from June 12 until the parliament approves next year’s budget.

The government is facing criticism for increasing the sales tax to 17% in general, and to 19% for unregistered persons, and giving effect to these proposals from June 12 under the Provisional Collection Act of 1931.

The Supreme Court of Pakistan has already taken suo motu notice of implementation of taxation proposals before the start of new fiscal year on July 1.

Senate Chairman Nayyar Hussain Bokhari also sent a reference to the standing committee, asking it to find out whether the 1931 Provisional Collection Act could become a base for implementing taxation proposals before the approval of budget.

Published in The Express Tribune, June 20^th, 2013.

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