ISLAMABAD: The government on Friday signed $407 million loan agreement with the World Bank for the construction of a 48-km long-road project — Khyber Pass Economic Corridor (KPEC) — from Peshawar to Torkham.

The agreement was signed between Economic Affairs Division (EAD) Secretary Dr Syed Pervaiz Abbas and WB’s Country Director Patchamuthu Illangovan.

Earlier, the project was strongly opposed by the Central Development Working Party (CDWP) as the Planning Commission questioned its economic viability and cost estimates. The Executive Committee of the National Economic Council led by PM’s adviser approved the project in view of the improving balance of payments position.

The project entails construction of “48Km-long four-lane, dual carriageway high-speed access controlled motorway, from Peshawar to Torkham”, according to the EAD. The road will promote economic development and uplift areas adjoining expressway in the Pakhtunkhwa province, it added.

Planning Commission doubts viability of four-lane motorway to Torkham

The project envisages use of Public-Private Partnership (PPP) and private financing to develop clusters of economic activity, economic zones and expressways. The connecting transport infrastructure and economic zones will provide a strong foundation for private businesses to invest in these zones, an official statement said.

The global integration of south and central Asia was intertwined with the Khyber Pass and had served as the key node in trade for hundreds of years, the EAD added. “The expressway between Peshawar and Kabul through the Khyber Pass represented a section of Corridors 5 and 6 of the Central Asia Regional Economic Cooperation,” it said explaining that Corridor 5, which will run through Pakistan, had the potential to provide the shortest link between the landlocked countries of Afghanistan, Tajikistan, Uzbekistan and the Arabian Sea”.

Corridor 6 provides access to Europe, Middle East and Russia. The KPEC will finance Peshawar-Torkham expressway portion of Corridor-5. The expressway is designed to reduce transit time and costs for regional and international trade transit through the Khyber Pass and will extend to Karachi - Lahore - Islamabad - Peshawar Trans-Pakistan Expressway System.

The project will form an integral part of the planned Peshawar - Kabul - Dushanbe Motorway. The improved regional connectivity through this corridor will not only facilitate the commercial traffic and expand economic activities between Pakistan and Afghanistan but also promote private sector development along the corridor. It is expected to generate up to 100,000 new jobs in Khyber Pakhtunkhwa.

But that is where the CDWP had questioned the project even after rationalising its cost from Rs40bn to Rs37bn. One highly placed source described the project as a “road to nowhere.”

“The proposed road will end at Torkham, what is there beyond this point to merit such an investment,” he added.

Moreover, the Planning Commission considered the high cost project an economically nonviable at this stage.

“There is no development on the construction of Torkham-Kabul Motorway from the Afghan side,” the Planning Commission had pointed out, in a summary sent to Encec, insisting that an agreement must be signed bewteen Pakistan, Afghanistan and Tajikistan for construction of motorway from Peshawar to Dushanbe via Kabul before taking up the KPEC to ensure connectivity and accessibility of Pakistan trade with Central Asian states.

The Planning Commission has also opposed the project on technical and economic basis. It said the road facilities were warranted and upgraded on the basis of traffic demand.

The existing Peshawar-Torkham two-lane single carriageway, it said, was carrying about 7,817 vehicles per day (VPD), including 52 per cent car traffic, which included only 1,177 VPD of freight traffic.

The Planning Commission has argued that in the absence of connectivity till Kabul and further to Dushanbe, there will be very minimal traffic available. “If the existing facility is dualised, which is a less cost proposition; it can accommodate 50,000 VPD and would suffice the traffic demand for next many years.”

As such, keeping in mind the limited freight traffic, the “construction of four-lane motorway on new alignment is not justified having very high unit cost of Rs871.5m per kilometre, which is more than the unit cost of Rs655m per km for six-lane Lahore-Abdul Hakeem Motorway recently completed, Rs435.82m per km for four-lane Hakla to Yarik (D. I. Khan) motorway and Rs510m per km for four-lane Sialkot to Lahore motorway”.

On top of that, the National Highway Authority (NHA) –proposed executing agency – had a throw-forward of Rs1.166 trillion with an allocation of Rs155bn under the Public Sector Development Programme 2019-20. Keeping the yearly allocations fixed at Rs155bn, about 7.5 years would be required to complete the NHA projects, those including in the PSDP 2019-20.

“With already constrained fiscal space and very low traffic volumes at present, taking up the project at a very high cost and with such rich specifications on loan basis is not justified,” the Planning Commission wrote.

Taking up this unviable project on foreign loan with very low returns will add further to the foreign debt of the country and is against the spirit of government’s initiative to combat the prevailing debt crisis.

Published in Dawn, December 14th, 2019