ISLAMABAD, July 14: The World Bank has agreed to provide $1.8bn to Pakistan for its $6bn National Trade Corridor (NTC) improvement programme to meet domestic transportation requirements and provide transit facilities to Central Asia, Western China, Afghanistan and Iran.
A World Bank team that had a meeting with Adviser to the Prime Minister on Finance Dr Salman Shah here on Friday committed that the bank would provide $300m a year as support to the programme.
The programme has been prepared through a year-long consultation process with various ministries and corporations and key international lenders including the World Bank, Asian Development Bank and Japan Bank for International Cooperation (JBIC).
It covers six core areas like ports and shipping, trade facilitation, highways and trucking modernisation, railway improvement and aviation and air transport modernisation.
According to an official statement Dr Salman Shah during the meeting said the government attached high priority to the programme to bring a paradigm improvement in the country’s competitiveness. The programme is spread over a period of six years and would be supported by other donors.
The investment plan will be fully implemented in about five years. This is estimated to save $5 to $7.5bn per annum to the country which is currently being lost due to low performance of railways, highways, trucking and ports and airports, says Dr Asad Shah, Planning Commission’s member on infrastructure.
"The existing infrastructure capacity cannot support 7-8pc of sustained economic growth," says a Planning Commission report on the NTC improvement plan. "Investments estimated at over $6bn (next five to six years) will be sequenced strategically and kick-started through high priority projects".
A comprehensive incentive package has already been announced in the federal budget 2006-07 for the trucking industry through tax and duty free import of large trucks for replacing obsolete 2-axle and 3-axle rigid trucks with introduction of modern prime movers, multi-axle and Euro standard trucks to turn Pakistan into a regional hub for international trade.
The government plans to shortly start roadshows in major international cities to attract investments in these sectors. A door-to-door truck service would also be launched for delivery of goods from ports, airports and railway stations.
The plan aims at improving Pakistan’s share of world trade from 0.2pc to 1pc by 2030 and increase Pakistan’s exports from $17bn in 2006 to around $250bn by 2030. It will "enhance regional connectivity through trade links and energy and transport corridors with China, Central Asian Republics, Afghanistan and Iran," said Mr Shah.
To reduce port costs and improve logistics, the berth draft of Karachi Port and Port Qasim would be deepened to attract larger capacity vessels and vessel charges and terminal handling charges would be drastically reduced. This will save Pakistan about $450m per year.
The banking and insurance sectors would support trade logistics and freight forwarding would be developed to meet the requirements of World Trade Organisation, South Asia Free Trade Arrangement and Economic Cooperation Organisation. The trade facilitation is estimated to provide a saving of $1.3bn per annum.
Similarly, the capacity of North-South transportation and allied national highways would be improved through commercial management and introduction of electronic tolling system. The highways modernisation is estimated to save $2bn annually.
Likewise, the railway system would be restructured through creation of a freight business unit with dedicated locomotives and rolling stock to reduce travel time for Karachi-Lahore container service to 28 hours against existing 56 hours. For this purpose, 75 transportation locomotives and 150 passenger coaches would be procured next year. This is estimated to save $1bn per year.
For aviation and air-transport, the regulatory, commercial and operating functions would be bifurcated and private sector airlines would be encouraged to operate on international routes.
