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Govt, ADB ink accord for release of $230m

Staff Report

ISLAMABAD: Government of Pakistan and Asian Development Bank (ADB) on Wednesday signed agreement for the release of 2nd tranche of $230 million of Programme Loan Agreement under National Highway Sector Development Programme.

Farrukh Qayyum, Secretary, EAD as government’s representative and Rune Stroem, Country Director, ADB signed the loan agreement here in Economic Affairs Division. This initiative is also in line with the government’s Medium Term Development Framework (2005-10) and is designed to achieve sustainable economic growth through reduction of transport costs for goods and passengers and to improve the regional connectivity to the country’s main economic centres. This agreement will also lead to improvement of road sector efficiency on the main transport corridor in Pakistan and institutional capacity building of NHA which will then be able to perform its core role of strategic management and planning of the NH network.

The loan has been negotiated out of ADB’s Multitranche Financing Facility (MFF) that provides with a long-term financing source for the undertaking of this investment programme. $180 million for the Project-1 has already been taken under this initiative in 2006 and the present agreement for $230 million is next in line out of the MFF for the Project-2. The objective of the investment programme is to develop a network of national highways. This project also aims to improve economic performance in project area as a result of efficiency gain for users along the project road.

The project comprises improvement of Sukkur-Jacobabad Road that links Quetta, the capital of Baluchistan with Sindh and Punjab provinces. The Project will: widen the existing section of 65 km between Sukkur and Jacobabad to a 4-lane dual carriageway road, and construct a new road bypassing at Shikarpur of 5 km and improvement of Qila Saifullah-Zhob Road which will widen and improve the existing section of 155 km between Qila Saifullah and Zhob to become 2-lane carriageway road.

The Tranche 2 sub projects will create significant employment opportunities for skilled and unskilled labor during their implementation. Unskilled labor will be employed directly in road construction, rehabilitation, and maintenance, and indirectly in providing materials and services for contractors. The projects will generate working opportunity for unskilled labor, generally at higher wage rates than otherwise obtainable in the local job market. The project will generate employment in areas where no other job opportunities exist. The project’s impact on poverty will be enhanced by encouraging contractors to engage local workers in project areas and to provide first priority to the poor and disadvantaged during construction. The projects will contribute to better living standards for the poor, generate off-farm employment opportunities, reduce commuting times, and provide improved access to services.

The sub project roads will facilitate marketing of agricultural produce and improve people’s access to social services in poverty areas, while also contributing to regional trade between Afghanistan and Pakistan. Fruit and vegetable distribution from poverty-affected areas will be facilitated by the two projects. In the medium to long term, the two routes are expected to play leading roles as sub regional connectors and trade facilitators, with widespread economic benefits for Pakistan, the sub region, and central Asia.

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