NHA Increase Construction Cost of Kharian-Rawalpindi Motorway

For the construction of the Kharian-Rawalpindi Motorway, the National Highway Authority (NHA) Executive Board recommended the PC-I for approval by the Central Development Working Party (CDWP)/Executive Committee of the National Economic Council (ECNEC). It is proposed at the revised PC-I cost of Rs. 169.323 billion against the initial PC-1 cost of Rs. 108.41 billion, i.e., increased by approximately 57 percent.

The updated PC-I Cost of Rs. 169.323 billion also includes capital viability gap funding (VGF) of Rs. 40 billion (capital VGF 20 billion + sub-debt VGF 20 billion). Also, it includes operational VGF of PKR Nil up to KIBOR 10 percent. Moreover, the government will provide financial support if KIBOR stays above 10 percent during the debt servicing period.

Arshad Majeed Mohmand, Chairman of the NHA, chaired the meeting, which approved the submission of a project qualifying proposal (PQP) to the Public Private Partnership Authority (P3A) in order to request their permission in accordance with the P3A Act.

The project, which has a total cost of Rs. 108.41 billion (including the government share of Rs. 36.112 billion [capital – viability gap funding (VGF): Rs. 7.5 billion, overhead costs: Rs. 16.012 billion, operational VGF): Rs. 12.6 billion], and concessionaire share of Rs. 72.298 billion, was previously approved by ECNEC in January 2022.

According to official sources, three bidders were competing for the project. Nonetheless, a letter of intent (LOI) was granted to begin construction on the Kharian-Rawalpindi Motorway project, naming the consortium M/s Techno-Matracon (JV) in Association with M/s Powerchina Chengdu as Lead Constructor and M/s ACC as Design & Supervision Consultant as the successful bidder.

To support the bidder’s proposal, Power China Chengdu had to confirm its primary role and percentage participation to Techno-Matracon JC and Power China Chengdu Engineering Corporation Limited. The NHA executive board rescinded the LOI and ended the procurement process. It is because the bidder did not respond to the critical points raised in the revocable LOI.

In order to prevent an excessive delay in the project’s completion, the Board instructed that going forward, the bidder would be given a 15-day extension for an additional 15 days to clarify any observations made in the letter of intent.

The motorway, which stretched 117.2 kilometers in total and had 4-lane access control from Kharian to Rawalpindi, was expected to be finished in two years.

This proposed motorway will be an expansion of the Sialkot-Kharian Motorway. It is now being built, and the Lahore-Sialkot Motorway, which is currently in use. The project begins at the Sialkot-Kharian Motorway junction interchange at Kharian and ends at the T-Chowk close to Rawalpindi/Islamabad.

The proposed motorway would follow the N-5, passing through the populated districts including: