ISLAMABAD: The government has decided to shift most of the infrastructure projects of road and railway sector to the private sector investment instead of Public Sector Development Programme (PSDP) because of shrinking fiscal space in the 12th Five-Year Plan.

“PSDP is not enough for the timely completion of ongoing infrastructure projects and the projects under 12th Five-Year Plan,” said the Federal Minister for Planning, Development and Reform Makhdum Khusro Bakhtyar.

He was presiding over a meeting to review infrastructure projects under China-Pakistan Economic Corridor framework, PSDP-funded projects and the fiscal difficulties.

The government has already scaled down the current year’s PSDP from around Rs1 trillion to Rs675 billion under the supplementary budget due to fiscal constraints. It was reported that the government would have to attract private sector investment by formally operationalising public-private partnership (PPP) or offer road and railway projects through Build, Operate & Transfer (BOT) mode.

National Highways and Motorways have been consuming bulk of the share of PSDP funding over the past four years, primarily because of many CPEC-related roads. Last year, the National Highway Authority spent Rs341bn out of PSDP’s total spending of around Rs795bn.

The meeting was also attended by Secretary Planning Zafar Hasan, Secretary Communication Shoaib Ahmad Siddiqui, DG National Logistics Cell Maj Gen Asim Iqbal, Engineer-in-Chief of Pakistan Army Lt Gen Muhammad Afzal, Chairman NHA Jawad Rafique Malik, Member Infrastructure Malik Ahmed Khan and senior officials of ministries concerned.

All the participants were directed to consider innovative financing models for private sector investment. It was explained that some major motorway projects had also been developed on BOT model with varying degrees of successes and failures and should be kept in mind while going ahead with fresh financing schemes.

The meeting was briefed about the progress on various road infrastructure and railway projects with main focus on finding an alternate source of funding for them as they consumed too much of the PSDP.

It was also reported that revisions in PSDP, owing to shortage of funds, was also a major cause of project delays, resulting in their increased cost. “Switching over to the PPP or BOT mode will relieve the burden on PSDP and also facilitate the provision of adequate funds for ongoing infrastructure projects for their timely completion,” the minister observed.

The meeting was also told that growth targets of 6.5-7pc envisaged in the 12th Five-Year Plan had to be revised due to fiscal constraints and other macroeconomic conditions. He said the planning minister was in the process of finalising the plan and there was a need to set priorities on how to go about developing infrastructure under an effective planning.

Bakhtyar also asked the relevant agencies to consider finding other means for generating revenue by utilising existing asset base for financing and effective implementation projects pertaining to roads and highways. One option, said an official, could be the launch of infrastructure bonds both on conventional and Islamic mode by utilising existing assets as collateral. It was felt that there was a need for devising a holistic strategy for developing and upgrading infrastructure across the country and fill connectivity gaps for sustained national growth.

Chairman National Highway Authority (NHA) also gave a briefing on various ongoing infrastructure projects including multiple routes under the CPEC framework.

Published in Dawn, November 24th, 2018