ISLAMABAD, Dec 3: The Asian Development Bank and the Economic Affairs Division on Wednesday signed an agreement for the first installment of the Multitranche Financing Facility (MFF) as part of the National Trade Corridor Highway Investment Programme.The project is expected to be completed by Dec 31, 2013, which would drastically reduce travel time between Karachi and Peshawar, a distance of 1,700 kms from existing 72 hours to 36 hours.

Of the total agreed amount of $900 million ADB loan, the first tranche of $180 million would be used for construction of a 58km highway (section-1) between Faisalabad and Khanewal.

The loan agreement was signed by ADB Pakistan Resident Mission’s Country Director Rune Stroem and Secretary of Economic Affairs Division, Farrukh Qayyum, while the project agreement was signed by ADB’s country director and NHA’s Altaf Ahmed Chaudhry.

The commitment charges on interest of the agreed loan have been reduced to 0.15 per cent from 0.35 per cent and 0.40 per cent. The highway project would be executed by the National Highway Authority (NHA).

The loan is set to help government in achieving the targeted objective against vision 2030 by raising the trade to GDP ratio from 30 per cent to 60 per cent.

The $900 million loan is a part of the $5.36 billion investment plan by the NHA, which envisages upgradation of highway from Karachi to Peshawar as well as links to the port of Gwadar and China.

An enhanced road network would cut the time and cost of moving goods and services. The cheaper transport costs would increase private sector productivity.

Speaking on the occasion, Farrukh Qayyum said that the government was determined to develop a fast, efficient and cost-effective corridor for land transportation.

He said that the National Trade Corridor would help reduce the transportation cost, eliminate bottlenecks in the logistic chain, boost economy, generate jobs and ultimately reduce poverty.

Mr Qayyum said assistance of $4 billion is expected from various donor agencies by the end of June 2009.

He said this includes $1.8 billion from the ADB.

ADB’s country director Rune Stroem said an efficient road network was a key to promoting economic growth and enhancing welfare of the people by catalysing better opportunities for them in accessing markets, jobs and social services.

He was of the view that the project would help develop a fast and cost-effective corridor for land transportation, which would stimulate regional trade flows and 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.

“Expansion and rehabilitation of national highway networks will have a positive impact on Pakistan’s economy,” Stroem said, adding that reduced travel and transportation distances across the country would help industry and agriculture sector.