Four approved projects : P3A estimates corporate taxes, revenue share income by govt

ISLAMABAD: The Public Private Partnership Authority (P3A) has estimated that corporate taxes and revenue share income by the government from four approved mega projects will amount to Rs1,500 billion and Rs850 billion, respectively over the life of concession contracts which typically expands to 25 years and in some cases beyond 30 years.

Senior officials of the authority told Business Recorder that the transaction structures optimised by the P3A and later approved by the P3A Board were aimed at minimising the government's liabilities besides stretching them over longer periods to avoid immediate cash outflow for the government. This has resulted in subsidy savings of over Rs80 billion.

The four mega approved projects to be taken in PPP mode at a total cost of Rs637 billion included Sialkot-Kharian Motorway with a project cost of Rs27 billion, Sukkur-Hyderabad Motorway –Rs307 billion, Kharian-Rawalpindi Motorway –Rs86 billion, and Karachi Circular Railway—Rs217 billion.

These projects contain a Viable Gap Fund (VGF) of Rs122.94 billion.

However, the KCR project is now proposed to be undertaken under the CPEC framework and a revised PC1 of the project had been approved by the Ecnec at a cost of Rs292 billion.

Sialkot-Kharian Motorway, which is at the financial close stages, is estimated to generate a revenue share of Rs8.5 billion. Sukkur-Hyderabad Motorway, which is ready to be awarded Rs408 billion and Kharian-Rawalpindi Motorway at tender process is estimated to have a revenue share of Rs113 billion.

Documents revealed that during 2022 one project of $135 million was awarded and two projects with a value of around $2 billion are yet to be awarded.

Talking to Business Recorder, the officials stated that the government has limited resources to finance development projects. The private sector participation is being actively pursued to introduce innovative financing solutions along with the transfer of project risks to the private sector which it is best able to manage and bring efficiencies in the delivery of public service.

Taking projects in PPP mode will result in a free-of-cost transfer of assets in adequate condition to implementing agency at the end of concession contracts.

Copyright Business Recorder, 2022