P3A Board gives go-ahead to M6, KCR projects
Public Private Partnership Authority (P3A) Board on Thursday approved the public private partnership (PPP) agreement for the construction of Sukkur-Hyderabad Motorway (M6) and given a nod to the ‘Development and Operation of Karachi Circular Railway (KCR) proposal.
The KCR project was presented before the Executive Committee of the National Economic Council (ECNEC) for approval.
The projects were approved in a 22nd meeting of P3A board chaired by Planning Commission Deputy Chairman Dr Mohammad Jehanzeb Khan. Meeting participants included Planning Secretary Abdul Aziz Uqaili, Finance Division Secretary Hamed Yaqoob Sheikh, National Highway Authority (NHA) Chairman Caption Muhammad Khurram Agha (retd), P3A CEO Malik Ahmad Khan, and Members Private Sector Development, Asim Saeed, Akbar Ayub Khan among others.
Last month, the P3A board had approved the project proposal of the successful bidder for construction of M-6 Project on PPP basis at a cost of Rs307 billion.
M-6 is 306km six-lane green-field facility proposed to be built on build-operate-transfer (BOT) basis. The project concession period is 25 years, including 30 months’ construction period and six months’ financial close period.
M-6 is the only missing link in the north-south motorway network starting from the port city of Karachi, traversing the provinces of Sindh and Punjab and finally terminating in Peshawar.
After the completion, the commuters would be able to travel from Karachi to upcountry via motorway.
The project is expected to harness unprecedented economic benefits in terms of time savings, saving in the accidents, vehicle operating cost savings and job creation.
As per the approved transaction structure, the government was only liable to pay capital VGF of Rs9.5 billion during the construction period as opposed to Rs92 billion originally projected.
The remaining cost would be financed
by the concessionaire through its own resources and toll income earned during construction.
The project was expected to fetch guaranteed Rs408 billion in the form of revenue share for the NHA and Rs918 billion in the form of corporate taxes for the government.
The approval of the PPP agreement by
the board would be followed by the signing of the deal between the concessionaire and the NHA.
The KCR project was approved by ECNEC at a cost of Rs201 billion. KCR envisages construction of 43km modern mass urban rail transit project proposed to be built on PPP basis. It would likely revamp public transportation system of the metropolitan city of Karachi.
KCR would deploy electric trains, which would work 17 hours a day and 7 days a week. The project was expected to accommodate over 450,000 passengers a day, which would likely go up to 1 million passengers a day by the end of the concession period.
KCR was expected to be awarded as a single-package PPP contract whereby the concessionaire would be responsible to construct civil works; procure electrical and mechanical component; and operate the project for concession period of 33 years including three years construction period.
The government, in order to make the project commercially viable for the private investors and enhance its bankability prospects, would offer capital VGF to the tune of Rs86.5 billion along forex cover for construction period and minimum revenue guarantee and inflation cover for the first five operational years. Moreover, the concessionaire would also be given a right to exploit real-estate potential of the KCR stations along the corridor.
The KCR would be transferred to the government/Pakistan Railways, at no cost, at the end of the concession period.
The board also approved amendments in the P3A Process Flow Regulations to streamline with the government’s approval processes for the development projects.
Planning Commission deputy chairman said “The two projects are an important part of the Sindh Development Package, which has been formed and put into implementation by the incumbent government to uplift socio-economic development in the region.”