ISLAMABAD, Sept 11: Three major international donors have expressed serious concern over the crumbling infrastructure in Pakistan and blamed both public and private sectors for that.
Dawn learnt on Tuesday that the World Bank, the Asian Development Bank (ADB) and the Department for International Development (DFID) of Britain have urged the government to remove “the serious bottlenecks in infrastructure” which, they believe, would require substantive resources over the next five years.
But for its ineffective infrastructure, they said, Pakistan could have attracted sizable foreign investment. Without proper infrastructure, the country cannot hope to generate employment, reduce poverty and ensure timely provision of services.
The existing infrastructure is “inadequate” to satisfy the needs of economic development and the growing population, the donors observed.
What worried them was that public investment in infrastructure had declined as percentage of GDP since 1990s and the private investment had not filled the gap.
Official sources said the ADB had agreed to offer, initially $400 million to help improve what was termed as the country’s ‘dilapidated infrastructure’. However, it demanded of the government to set up a “project coordination unit” in the ministry of finance to coordinate the implementation of the Private Participation in Infrastructure (PPI) programme in the country.
For this purpose, the ADB has separately committed $100,000 grant to be also soon participated by the World Bank aimed at effectively utilising ADB’s $400 million assistance.
Given the government’s fiscal situation, these donors, however, acknowledged that public sector cannot offer many resources for which alternative approaches were needed including PPI.
In this behalf, a decision has been taken by the government to create two companies in the private sector — Infrastructure Project Development Facility (IPDF) and Infrastructure Project Financing Facility (IPFF) - to arrange capital mobilisation for improving the decaying infrastructure of Pakistan. In addition to that a task force headed by Adviser to the prime minister Dr Salman Shah has also been constituted to work as a multi-sector and multi-stakeholders forum for developing an appropriate policy and legislative framework for PPPs.
Both IPDF and IPFF will coordinate with the stakeholders and private investors for increasing Public Private Partnership (PPP) in the new infrastructure projects as well as promoting private investment in the sector.
The IPDF will help identify suitable projects for private investment and assist the sponsors with the government and the private sector to come to “faster closure of deals”. The IPDF, being a facilitator is independent of the planning and budgeted process. It has been provided a professional team of experts.
While the IPFF, a non banking finance company, established under the ministry of finance will fill the gap created by a weak project finance market. It will provide long-term loans at a tenor that is not currently available in the market and on commercial terms based on prudent banking principles. Like IPDF, IPFF will be independently run by a professional team and a structure and business process that reflect best practices.
The PCU will coordinate with the IPDF, IPFF and the task force on PPP in order to achieve the laid down objectives and will act as a bridge/liaison amongst the companies, donors, line ministries, departments, state owned entities (SOEs) at federal, provincial and district governments level and private sector on behalf of the ministry of finance.
