M-12 motorway cost swells six times to Rs71b
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The delay in land acquisition for motorway project M-12 (Sialkot-Kharian) and an unprecedented increase in inflation and Karachi Inter-bank Offered Rate (Kibor) have caused a massive rise of six times in the cost of the project to Rs71 billion.
Sources in the National Highway Authority (NHA) told The Express Tribune that construction cost of the project stood at Rs22.5 billion initially in 2021 that jumped up to Rs71 billion for six lanes by December 2024.
They said that NHA chairman, in a recent high-level meeting, informed Prime Minister Shehbaz Sharif that due to the realignment of road from the original Request for Proposal (RFP), prompted by the hydraulic model study for a bridge at the Chenab River, there was a delay in land acquisition for the realigned portion.
He said that additional delays were caused by changes in scope and an unprecedented increase in inflation and Kibor. As a result, the concessionaire submitted a request to NHA for renegotiation of the public-private partnership (PPP) agreement in November 2023.
The P3A board referred the matter to the Special Investment Facilitation Council (SIFC) in October 2024, he said, adding that due to the aforementioned factors, the construction cost of the project increased from the initial Rs22.5 billion in 2021 to Rs61.529 billion for four lanes and Rs71 billion for six lanes by December 2024.
The working group had recommended on December 12, 2024 that the Sialkot-Kharian motorway be constructed as a six-lane facility from the outset. They directed NHA to submit a position paper through the Ministry of Communications to the Planning Commission for approval from the relevant forums.
In pursuance of the working group's decision, a study was conducted to assess the traffic volume. It concluded that two additional lanes would be required by 2027, with extra expenditure of Rs20.7 billion. However, the construction of six lanes from the outset would cost an additional Rs9.5 billion, resulting in approximate savings of Rs11 billion.
Accordingly, the NHA and the Frontier Works Organisation (FWO) deliberated on three options on February 21, 2025 including the six-lane option proposed by NHA, with a base construction cost of Rs71 billion and a total project cost of Rs81.97 billion.
Sources said that the prime minister and the bodies concerned endorsed the proposal for the construction of six lanes from the outset.
It was decided in a recent meeting that the Ministry of Communications and NHA would submit a position paper involving the six-lane option for M-12 (Sialkot-Kharian) and other scope changes for approval from the relevant forums.
It was also decided that NHA would submit a revised financing structure and seek the P3A board approval within two weeks.
Additionally, the NHA will submit a revised PC-1 of the project for approval from the Central Development Working Party (CDWP) and the Executive Committee of the National Economic Council (Ecnec) within one month, by April 10, 2025. NHA and FWO shall execute an amendment to the PPP agreement in line with the approved financing structure by April 30, 2025.
It was further decided that in future, any technical study that may impact the execution of a project should be included as part of the feasibility study to ensure comprehensive planning and avoid delays. NHA shall deliver a comprehensive presentation to the minister for planning, development and special initiatives on its priority Public Sector Development Programme (PSDP) projects within one week.
Also, the NHA shall develop a holistic master plan for planned motorways and highways, ensuring end-to-end connectivity rather than isolated, fragmented development.
Considering the strategic and socio-economic importance of N-25, it was agreed that NHA should undertake fast-track construction of the Karachi-Quetta section, followed by the Quetta-Chaman section, with a targeted completion timeline of three years.
Additionally, the NHA should ensure the establishment of service and rest areas at suitable locations to enhance the safety and convenience for road commuters.
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