Delay in projects

Published October 16, 2023

AS the old adage ‘there’s many a slip twixt cup and lip’ goes, the much-delayed rail track project — Main Line-1 — stretching from Peshawar to Karachi has again hit a snag. A day after it was reported that Pakistan and China were expected to formally announce and sign an addendum to the revised ML-1 framework agreement during the third Belt and Road Initiative Forum in Beijing this week, Pakistan’s finance ministry has sought to water down expectations of the commencement of work on the rehabilitation and replacement of the 1,726km-long worn-out railway line anytime soon. An official told the media that the project remains subject to IMF approval and the finance ministry’s ability to provide sovereign guarantees for a $6.67bn loan from China, even though the scheme’s cost has been cut by 32pc from the previous estimate of $9.85bn. Under the rules dictated by the lender, the government cannot issue sovereign guarantees beyond 2pc of GDP in a year. The ML-1 loan, even after the downward cost adjustment, is roughly around this limit. The ML-1 project is critical for Pakistan and its economy but has faced multiple delays due to cost escalations, Covid-19, internal political instability, disagreement on financing costs, the liquidity crunch, and security concerns regarding Chinese workers since it was first agreed to in 2017. Further delay is likely to again result in cost overruns and force Pakistan to make more compromises on its design, scope and quality.

However, ML-1 is not the only transport project facing delays and cost escalations. The 306km-long Hyderabad-Sukkur Motorway (M-6) — the final, missing link in the chain of motorways from Peshawar to Karachi — is also facing threat of more delays, amid fears of its cost going up hugely as the National Highway Authority considers terminating the contract awarded to a consortium of local and foreign companies on some technical grounds. The delays faced by these projects underline two major issues: first, Pakistan’s dependence on foreign loans for the development of its infrastructure owing to its perpetual fiscal problems; second, the lack of capacity of government departments to properly plan and design a scheme, and draw up and award contracts that protect the public interest rather than the profits of the contractors. Unless we overcome these shortcomings, our infrastructure schemes will continue to face delays and cost overruns.

Published in Dawn, October 16th, 2023

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