ISLAMABAD, Dec 3: The Islamabad-Lahore motorway project cost has now crossed Rs60 billion as Pakistan continues repayments of Rs2 billion annual interest to the Korean construction firm.

Maj-Gen Furrukh Javed, chairman of the National Highway Authority (NHA), said on Monday: “An amount of Rs2 billion annually is payable to Daewoo as interest on principle amount till the time total loan is repaid.”

He also confirmed that “considering the dollar fluctuation, M-2 (Islamabad-Lahore motorway) has cost over Rs60 billion to the government, whereas, income from M-2 is Rs450 million annually, which is only 0.6 per cent per annum of the total investment.”

Furrukh said the government had now decided to take over the total repayment obligations from the NHA. The NHA, he added, was unable to repay the loan because its total toll earnings from all over the country amounted to around Rs3 billion while interest repayment to Daewoo alone stood at Rs2 billion and it would not be possible to finance its other projects.

Furrukh claimed that 30 per cent increase in project cost had resulted only because of changes in the scope of the work from four-lanes to six-lanes, again to four-lanes and then again to six-lanes.

Contract for the M-2 was awarded to M/s Daewoo Corporation of Korea on Dec 30, 1991, at a cost of Rs23.686 billion on design-cum-construct basis. The original contract was for four-lane facility.

Daewoo provided loan of $379 million as supplier’s credit at Libor plus one interest to meet 40 per cent of the project cost, repayable in 21 semi-annual equal instalments. The loan was revised to $654 million due to enhanced scope of work but final loan utilisation touched $702 million.

Service charges on loan amounted to Rs235 million while interest paid during the construction period amounted to Rs2.239 billion. A total of $83 million loan has so far been repaid while balance loan to be paid stands at $619 million.

Balance 60 per cent was made available by the government. On ground, work commenced in April 1992 and was completed on Nov 27, 1997.

The PC-1 cost was estimated at Rs27.899 billion which increased to Rs38.412 billion due to revised scope of work. This included Rs34 billion as construction cost. Revised scope included addition of two lanes, median barrier and two link roads connecting M-2 with the G.T. Road.