Balochistan highway network: ADB wing rates $240.5m project as relevant, successful

ISLAMABAD: The Independent Evaluation Department (IED) of the Asian Development Bank (ADB) has rated “Pakistan: National Highway Network Development in Balochistan Project” of worth $240.50 million, “relevant and successful.”

The IED in its validation report stated that the project targeted two outputs. The first output was rehabilitation of 201-kilometers two-lane roads N-50 between Zhob and Mughal Kot (81 kms) and N-70 between Qila Saifullah and Waghum Rud (120 kms) in Balochistan.

The second output was the development of five community facilitation centers (CFC) along the project roads to benefit the local communities.

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The loan was approved in June 2014 and became effective after two months. The loan was closed in January 2020, about two years later than the planned loan closing date. The loan was extended twice with the ADB’s approval and financially closed in January 2021. Project implementation was delayed because of the shortage of construction equipment and technical personnel as the project was in a security-constrained environment. Untoward incidents in the works vicinity had suspended the works until normalization of the situation.

Retaining skilled manpower in such an environment was challenging. This validation notes other causes of delays that ADB project mission reports identified: (i) revised profiling of hydrology and alignment of the project after the start of civil works; (ii) late delivery of the bridge designs by the design and supervision consultant (DSC); (iii) delayed shifting of utilities; and (iv) weak supervision of the consultants at sites.

The Government of the United Kingdom, through the Foreign Commonwealth and Development Office (FCDO), approved a grant of $72.4 million to the Government of Pakistan, for project co-financing in November 2015. The ADB administered the grant, and the Pakistan Economic Corridors Programme became effective in February 2016. The grant closed in December 2022, which was four years delayed with two approved extensions.

At appraisal, the estimated project cost was $240.5 million: ADB financing 83.4% and the government counterpart 16.6%. At completion, total project cost was reduced by 28.7% (comprising a grant of $68.6 million): ADB’s share changed to 55.5%, government counterpart to 4.4%, and the rest of 40% was a grant. At financial closure in January 2021, the undisbursed balance of $32.90 million was canceled. For civil works under the FCDO grant, 97% of the allocation was utilized and a $3.83 million was canceled. The lower project costs were due to the low bid prices and devaluations of the Pakistan rupee and the pound sterling against the US dollar.

It was estimated that the project would require 78 person-months of international and 2,309 person-months of national experts. Actual consulting services mobilized 50 person-months of international and 3,601 person-months of national experts. The mobilization of the DSC consultant was synchronized with the civil works contract. Because of the security environment in the project sites, the international consultants stayed in Islamabad and visited the project sites frequently to supervise the works. The project was classified category B for environment.

The project completion report (PCR) rated the project relevant and noted that it was aligned with ADB’s Country Partnership Strategy for Pakistan, 2009–2013 (CPS 2009–2013) and government priorities under Pakistan 2025: One Nation–One Vision (Vision 2025), with respect to national road development, modernization of transportation infrastructure, greater regional connectivity, and uplift of deprived and vulnerable communities.

This validation notes that the CPS 2009–2013 recognized that Pakistan’s road network has vital links to all other sectors of the economy and is critical for narrowing the rural–urban income gap, as well as improving connectivity, productivity, competitiveness, and trade. Because roads account for 91% of passenger traffic and 96% of freight traffic, network expansion and overhaul require additional investments and financing.

The PCR rated the project effective and noted that out of the two outputs, the first related to the rehabilitation of the two-lane road segments of Zhob–Mughal Kot and Qila Saifullah– Waghum was mostly achieved, while the development of the CFC was not achieved.

The PCR rated the project efficient. At appraisal, the project’s overall economic internal rates of return (EIRR) was 19.7%, with the Zhob–Mughal Kot section’s (N-50) EIRR yielding 23.8% and the Qila Saifullah–Waghum Rud section’s (N-70) resulting to an EIRR of 15.1%. At completion, the recalculated overall EIRR was 16.8%, lower than estimated at appraisal, although confirming that the project at completion is economically viable. The recalculated EIRRs for the N-50 and N-70 project sections were at 14.7% and 19.5%, respectively. The PCR noted that the EIRR at reevaluation was lower because of a higher assumed speed increase at appraisal from 35 kilometers per hour (kph) to 60 kph compared with 35 kph to 47 kph at reevaluation; and different with and without maintenance assumptions (at appraisal, 40% lower than without-project and at reevaluation about 20% higher than without-project maintenance) because of the increased carriageway width.

The PCR rated the project likely sustainable and noted that maintenance of the entire national highway and motorway network is financed off-budget through the Road Maintenance Account under NHA’s control, where 70%–75% is sourced from toll revenues.

Copyright Business Recorder, 2024