UK to partner in CPEC, provide $121.6 million grant

ISLAMABAD: In a significant development, the United Kingdom has become a partner in China-Pakistan Economic Corridor and agreed to provide $121.6 million in grant to fund construction of Burhan-Havelian Expressway, which falls on the northern route of the corridor.

The Asian Development Bank (ADB) and the Department for International Development (DFID) of the United Kingdom will co-finance the $327 million cost of the 59km-long Hassanabdal-Havelian Expressway (E-35) project, according to a handout issued by the Manila-based lending agency on Tuesday.

UK’s $121.6 million grant will lessen Pakistan’s debt obligations by the same amount. The country had entered into a loan agreement with ADB, which will now be picked up by UK taxpayers to the extent of the grant amount.

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It is for the first time that the UK will fund any infrastructure sector project in Pakistan, as so far its focus remained on social sectors. It is also the first time that the UK is partnering with the Manila-based lending agency in a project located in Pakistan.

“The ADB and DFID are joining hands to promote regional connectivity, economic growth, and stability in Pakistan”, said Sean O’Sullivan, Director General of ADB’s Central and West Asia Department who witnessed the signing of the agreement.

O’Sullivan is visiting Pakistan for the first time. He said the ADB’s partnership with DFID for the E-35 is an important step towards regional connectivity.

Finance Minister Ishaq Dar and Head of DFID Pakistan, Richard Montgomery, were also present on the occasion. The loan agreement was signed by ADB’s Country Director for Pakistan Werner E. Liepach and Secretary Economic Affairs Division Muhammad Saleem Sethi, while the project agreement was signed by Chairman, National Highway Authority Shahid Ashraf Tarar.

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The ADB had earlier approved $327 million for the project in two tranches of $200 million and $127 million respectively under the multi tranche facility (MFF) for National Trade Corridor Highway Investment Program (NTCHIP).

The original investment was for the E35 expressway connecting the existing M1 at Hassanabdal (Burhan) to Havelian. DFID’s grant contribution of $121.6 million will allow ADB to fund the extension of the expressway to Abottabad and Mansehra to the north.

The DFID will provide the grant in two tranches. The first tranche will be equal to $82.4 million while the second tranche will amount to $39.2 million.

The 59.1km-long Burhan-Havelian road is an important juncture on northern alignment of the CPEC, which will connect the eastern and western alignments with China’s Kunjarab. The total cost of the project is Rs39.5 billion and till June this year an amount of Rs2.8 billion was spent on ground.

There are two other projects that will link Thakot to Havelian on the northern route. The government is also in process of awarding construction contracts of Thakot-Havelian road to Chinese contractors. However, due to high bidding cost the contract has not been awarded yet.

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The upgrade to the E35 Expressway will allow Pakistan to act as a transit artery for goods moving between Arabian seaports in the south and the People’s Republic of China in the north, said the ADB.

The Expressway will enable safer, faster and more cost effective inter-regional transportation of goods and services spurring economic activity and opportunities for the people in towns and cities-along the route.

Head of Office, DFID Pakistan said that the UK’s collaboration will support Pakistan to improve road safety and to create an environment that will transform roads into economic corridors. This partnership will not only help Pakistan promote and expand trade with regional partners, but also to create more jobs and sustainable livelihoods.”