LEFC project cost: NA body expresses reservations over disparity

ISLAMABAD: The National Assembly Standing Committee on Economic Affairs Division (EAD) expressed reservations over the significant disparity in the estimated cost of the Lyari Elevated Freight Corridor (LEFC) Project under the proposed financing arrangement with the Korean Exim Bank compared to the estimate prepared by the National Highway Authority (NHA).

The NA panel, which met here on Wednesday under the acting Chairmanship of MNA Dr. Mirza Ikhtiar Baig, observed that the proposed financing would entail a project cost nearly twice that estimated by the NHA and emphasised the need to identify the most cost-effective financing option in the national interest.

Members were of the view that the Karachi Port Trust (KPT), being the principal beneficiary of the project, should actively explore viable financing mechanisms, including implementation through the Public-Private Partnership (PPP) mode.

The committee was informed that, under the proposed loan conditions, approximately 35 percent of the project materials and the contractor would be sourced from the Republic of Korea. After detailed deliberations, the committee recommended that Secretary, EAD Muhammad Humair Karim convene consultations with the National Highway Authority, the Ministry of Planning, Development and Special Initiatives, and the KPT to develop a mutually agreed and financially prudent financing model.

The NA body further emphasised that all available options, including financing through the Public Sector Development Programme (PSDP), the PPP framework, or any other viable mechanism, should be comprehensively evaluated to ensure implementation of the project at the least possible cost and on terms more favourable than the proposed Korean Exim Bank financing.

The committee expressed deep concerns over the slow progress of the K-IV Water Supply Project, noting that only Rs10 billion had been allocated against the project’s estimated requirement of Rs78 billion. The committee observed that the significant funding gap could adversely affect the timely completion of the project and delay the provision of an adequate water supply to Karachi. Emphasising the strategic importance of the project, the committee recommended that the Ministry of Water Resources and the Project Director for the K-IV project present a comprehensive briefing at its next meeting.

The committee was apprised of the progress on Tranche-III of the Central Asia Regional Economic Cooperation (CAREC) Project and was informed that, following nearly three years of litigation, the NHA has awarded the contract for the project, with completion targeted by December 2027 in accordance with the revised implementation schedule.

While welcoming the resumption of the project, the committee expressed concern over the substantial delays and emphasised the need for strict adherence to the agreed timeline. The committee observed that approximately one and a half years remain for project completion and stressed that any further delay could have financial and implementation implications. It therefore recommended that, in the event the project is not completed within the stipulated timeframe, the government should initiate timely negotiations with the financing partner, the Asian Development Bank, to secure any extension of financing on the same terms and conditions, thereby safeguarding the national interest and ensuring the uninterrupted completion of the project.

Copyright Business Recorder, 2026