National Trade Corridor

While the total cost of National Trade Corridor (NTC) highway has been calculated at $5.36 billion, the Asian Development Bank has announced that the maximum financing amount of only around $900 million will be available under the Multitranche Financing Facility (MFF) for the programme, says a Recorder Report.
According to the final project updates released by ADB, the MFF comprises $890 million from OCR and $10 million equivalent from ADF resources. The ADB report says that the Government of Pakistan will make the proceeds of the loans available to NHA according to the terms and conditions satisfactory to the Asian Development Bank.
The project originates from Pakistan's long-term transportation strategy and is an integral part of the National Trade Corridor programme. The MFF is designed to finance part of the NTC highway plan through individual loans. According to ADB Project Update quoted in our report, the Pakistan government plans under the strategic framework of "Vision 2030" to raise the trade-to-GDP ratio from 30 percent to about 60 percent.
In real terms, this works out to be equivalent to some 600 billion dollars by the year 2030. In order to achieve this target the key actions under the strategy will be to attain improved trade competitiveness and export diversification.
However, our logistics are currently viewed as the major constraint to achieving competitiveness and attracting greater FDI. These constraints are also a bottleneck to achieving increased productivity and diversification of the industrial base. As a core component of NTCP, NHA has developed the National Trade Corridor highway investment plan, which covers the corridor's backbone from Peshawar to Karachi and the outlying links that will connect Pakistan to China via Gwadar Port in Balochistan.
After the development of north-south and east-west trade links, energy and industrial corridors to China, CARs, Afghanistan and Iran would also be undertaken.
The primary thrust of the mega project, which is the largest ever undertaken in the domain of logistics and communication in the country's history, is on decreasing the cost of doing business through improved trade logistics and connectivity.
There are numerous benefits that will accrue to our economy such as reduction in Karachi-Peshawar cargo travel time from 72 hours to 36 hours, while the road losses will be reduced to the tune of over $1 billion per annum. China is reported to have, meanwhile, agreed to widen and rehabilitate 600 kilometers of KKH at a cost of $350 million.
The main artery and north-south corridor linking Karachi with Torkham on Pakistan-Afghanistan border via Lahore, Rawalpindi and Peshawar is the mainstay of the country's road network, and its economic lifeline. The GT Road is being converted into a dual carriageway, under the multi-billion dollar project. Similarly, the Indus Highway, which is on the left side of the Indus River, is also being constructed according to the specifications of the Asian highways, as recommended by ADB.
The construction of Kohat Tunnel, N-55, is set to play a crucial role not only inside Pakistan but also in promoting inter-regional connectivity. According to one estimate, the transport cost would be reduced through restructuring and modernisation of railways, under NTC programme, which will result in an estimated saving of $2 billion to $2.5 billion per year.
Further, according to another estimate, the administrative measures, ie reduction in documentation, will result in an additional saving of $1.2 billion per annum. Modernisation of the existing trucking fleet is also planned, which is estimated to reduce fuel import bill by 25% and the road maintenance cost by $1 billion.
The National Trade Corridor assumes special importance when viewed against the backdrop of the quota-free WTO regime, in force since January 2005. The second prong of the mega project is the construction of the deepsea port at Gwadar, which is designed to provide an alternative maritime outlet to the Central Asian states and China.
The fact that Pakistan's logistic base has remained essentially under-developed has played a contributory role in inhibiting realisation of the country's full economic growth potential, though there has been steady progress in the cargo handling capacity of the country's two premier seaports.
Gwadar is already connected to Karachi by a coastal highway, and plans are afoot to build a south-north highway to link Gwadar via the RCD Highway and the Indus Highway to the Karakoram Highway and western China. Pakistan has long coveted the vast energy resources of Central Asia, and the completion of NTC will be an important milestone towards achievement of this target.