ISLAMABAD, Dec 11: The Asian Development Bank announced on Tuesday it would provide Pakistan up to $1.15 billion new loans for the north-south highway network — called National Trade Corridor — and for public sector reforms in Punjab.

Of the $1.15 billion, $900 million will go towards a $5.36 billion investment plan by the National Highway Authority to upgrade the highway from Karachi to Peshawar as well as links to the port of Gwadar and China. Once the road improvements have been completed, travel time between Karachi and Peshawar, a distance of 1,700km, will be cut from 72 hours to 36.

The upgrade is also crucial for regional trade flows and will allow Pakistan to act as a transit artery for goods moving between Arabian Sea ports in the south and Central Asia and China in the north, an ADB statement said.

From the first tranche, $545 million will be used for two road projects: a 184km stretch from Faisalabad to Khanewal, as well as a 34km expressway from Torkham, on the Afghan-Pakistan border, to Peshawar. For the subsequent tranches, depending on the appetite from private sector, structures such as guarantees and equity financing would be used under the programme to foster public-private partnership in the road sector.

In addition to $900 million, the ADB will provide Pakistan with $260.65 million in loans and grants to assist Punjab pursue reforms that will improve efficiency in the public sector. “Both of these programmes will boost the economy, which generates new jobs and reduces poverty, said Mr. Sean O’Sullivan, Deputy Director General of ADB’s Central and West Asia Department.

Up to $900 million is to rehabilitate and expand key sections of the country’s main highway network, which starts at Karachi and runs northward. A lack of adequate roads in Pakistan is leading to a transport bottleneck. It is a constraint to improving competitiveness and attracting private sector investment.

“With trade flows concentrated along one major north-south transport corridor, this programme will make road traffic more efficient and reduce transport costs,” said Ms Cleo Kawawaki, a Senior Investment Specialist with ADB. Cheaper transport costs will increase private sector productivity, which will help deepen and diversify the industrial base, both of which are necessary to provide jobs for the growing population, she said.

Talking about loans for Punjab, the statement said the province needed continued infusion of public and private investments to keep pace with the growth requirements of the economy and, at the same time, ensure sound maintenance of investments made.

For this to happen, Punjab needs major improvements on three fronts — enhancing public sector efficiency, increasing access to and improving the quality of public services, and accelerating private sector participation in the provision of services, said Mr. Ramesh Subramaniam, Director of ADB’s Central and West Asia Department.