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Govt refuses to finance KPK motorway project

ISLAMABAD: The Federal Government has reportedly refused to finance 360-kilometer Peshawar-Dera Ismail Khan Motorway...
Updated 24 Sep 2021

Islamabad: The Federal Government has reportedly refused to finance 360-kilometre Peshawar-Dera Ismail Khan Motorway project of the Khyber Pakhtunkhwa (KPK) government due to non-availability of financial cushion for such projects for the time being, well informed sources in Planning Commission told Business Recorder.

Sharing the details, the sources said the Ministry of Planning, Development and Special Initiatives briefed the Executive Committee of National Economic Council (ECNEC) on September 10, 2021, about the proposal.

It was revealed that the project was considered by the CDWP in its meeting held on 12-7-2021 and was recommended for consideration and approval of the ECNEC at a total cost of Rs 226,529.496 million for the purpose of seeking financing under the CPEC framework or any other mode of financing with the following conditions: (i) The Federal Government will not provide any funds for the project through PSDP or any other federal resources; (ii) in case, the financing under CPEC is confirmed, the repayment of loan and all associated charges will be the responsibility of sponsors of the project i.e. Government of Khyber Pakhtunkhwa; (iii) in case project is to be implemented on PPP basis, Government of KP will seek approval from its competent fora established for PPP projects and no viability gap funding (including land acquisition cost) will be provided by the Federal Government. In the scenario of PPP modality, a proper financial model on authentic data will be developed by the Government of KP. The Finance Minister KP stated that the project was of national importance as it will open up the whole region and since the economic benefits of the project would be substantial for the entire country, the Federal Government should share financing in shape of Viability Gap Fund (VGF).

Govt approves feasibilities of Dera Motorway

Federal Minister Planning pointed out that the project was considered on the express commitment of Chief Minister KP that no federal funding would be involved.

He further pointed out that the Federal PSDP was already heavily tilted towards road and infrastructure projects with heavy throw forward.

Federal Finance Minister observed that there was no fiscal cushion for such a project for the time being; however, KP Government may bring the project back, if required, at the time of formulation of next PSDP for consideration. After detailed discussion on Peshawar Dera Ismail Khan Motorway, the proposals/submission along with the conditions/observations of the CDWP was approved. If any reconsideration would be required in future the Government of KP may approach the Federal Government.

Copyright Business Recorder, 2021

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