ISLAMABAD, Dec 15: The federal government might lose billions of rupees in the construction of Peshawar-Islamabad (M1) road project, as even after the lapse of seven months since the project was taken over from Turkish contractor, Bayinder, the work on it has not started.

Experts monitoring the project fear that the cost of the project might touch Rs50 billion for the four-lane, 156km road.

At the time of expelling the contractor from the site, the then Chairman of NHA, Maj-Gen Tariq Javed had said that if the project had been completed by the Turkish contractor, Pakistan would have had to pay Rs45 billion because of favours which were extended to the contractor by the then government of Mian Nawaz Sharif. He had said that the project would now be completed at a cost less than Rs45 billion.

The government had taken over the project from Turkish contractor on May 7, on the grounds that the contractor had failed to hand over the two sections on schedule.

The contractor had asked for time extension till August, 2001, for the completion of two sections — Islamabad to Burhan and Peshawar to Rushaki.

The idea behind expulsion of the contractor from the site was to complete the project quickly and save the money. Both the objectives are unlikely to be achieved now as the National Highway Authority has failed to hand over the project to local contractors.

The Turkish contractor was required to hand over two sections of the road, Burhan and Rushakai, to the NHA, on March 23, 2001. The complete road was to be handed over to the NHA by Dec 31, 2002.

The government had claimed that after expelling the contractor it would be in a position to recall mobilisation advance guarantee of about $70 million, offered by Turkish banks. The government has so far failed to encash the guarantee as a Turkish court had restrained the banks from encashing the guarantee till the finality of litigation process going on between the contractor and the NHA.

The government, which wanted to give work to the local contractors, has annoyed them saying that NHA owed nothing to them as they had been employed by the Turkish contractor. The local contractors demand payment of over Rs1 billion.