ISLAMABAD: Executive Committee of National Economic Council (ECNEC) has approved 8 projects costing (estimated) Rs125 billion. First meeting of the newly reconstituted ECNEC was chaired by Prime Minister Shahid Khaqan Abbasi. Earlier, ECNEC was led by Finance Minister Ishaq Dar.
The meeting approved changes in financing modalities for construction of Lahore – Sialkot Motorway project (cost Rs45.38bn) after National Highway Authority (NHA) failed to raise Rs5bn from the market despite letter of comfort issued by Ministry of Finance.
The meeting decided to provide Rs5bn from public sector development program (PSDP) to NHA as cash loan that it would pay to Frontier Works Organisation (FWO) and return to government at an interest rate of about 14 pc.
NHA’s share in PSDP has increased from Rs240bn to Rs245bn and NHA would not raise market funds that it could have at a lower interest rate.
The motorway project is being developed on a build- operate- transfer basis at an estimated cost of Rs45.382bn. The contract has been awarded to Frontier Works Organisation (FWO).
Under the agreement signed by NHA with a project company owned by FWO, Government was required to meet a financing gap of Rs18bn to make the project viable. FWO was required to arrange about Rs21bn, while NHA had to provide about Rs1.6bn as overhead expenses and Rs5bn as loan outside PSDP.
The government was required to release Rs9hn as first tranche, provided to NHA in financial year 2016 through re-appropriation of PSDP allocations. For second tranche of Rs9bn for current fiscal year, the government had committed to provide a letter of comfort to a bank to provide a standby letter of credit as Planning Commission had declined to make this a part of next year’s PSDP.
PM secretariat intervened in April 2016 and directed Ministries of Communication and Finance to issue letters of comfort to ensure achieving financial close. ECC had approved issuance of letter of comfort but the credit did not materialise.
It was therefore decided by ECNEC to increase NHA’s allocations by Rs5bn to deliver on commitment to the contractor.
ECNEC also approved construction of a new 132kv grid station and transmission lines by Sukkur Electric Power Company (SEPCO) at a total cost of Rs12.7bn to control its system losses and repeated outages.
Likewise, another project for SEPCO was approved for distribution of power aimed at expanding distribution network to meet growing demands in Sindh districts at a total cost of Rs3,825.16m.
The meeting also approved another energy sector project worth Rs10.5bn namely Energy Loss Reduction Project to reduce technical losses resulting from distribution conductors and equipment due to poor power factor in various Sindh districts costing Rs10.51bn.
The project includes construction of new 11kv lines, reconducting of like lines, installation of 37 capacitors, replacement of overloaded transformers, construction of new transformer sub-stations, energy meters and replacing earthing.
The meeting also approved construction of Chitral- Garam Chashma-Doraha Pass Road at a total cost of Rs8.31bn. It also approved doubling and improving of 8km long old Bannu Road at a total cost of Rs17.23bn.
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