Volume 2, issue #27 - 08-12-1997

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Pakistan is working to develop

Nov. 4, 1997 Pakistan is facing tough choices as it heads towards the 21st century.
"We need roads, we need to develop the ports, we need power and irrigation, we need telecommunications," a senior government official said. "But where do we have the money for these mega projects?" added the official.
With a literacy rate of 36 %, population growth of 3 % and 36 million of its 140 million people living in poverty, Pakistan must decide whether to invest in mega projects or just keep people fed, clothed and sheltered, he said.
Fatima Shah, senior financial analyst at James Capel Asia Ltd, noted Pakistan needed hundreds of billions of rupees for infrastructure and would find it difficult to raise the money. "To fund all this infrastructure, where does all this money come from?" she said. "Partly they can be financed by multilateral funds but in terms of commercial credit it would be far too expensive at this point in time. The first step is to prioritise them. They can't be all done at the same time so projects have to be staggered."
Pakistan soon to open a grand motorway
Despite resource constraints, Pakistan plans to open its first toll-paying motorway, linking Islamabad and Lahore, by the end of 1997. But industry analysts have questioned whether the tolls would raise the anticipated revenue.
Part of a motorway network planned by Pakistani Prime Minister Nawaz Sharif, the cost of the 6-lane 333-km (208-mile) road between the Pakistani capital and the capital of Punjab province is now estimated at more than 33 bn rupees ($ 831 mm).
South Korea's Daewoo Corp, the main contractor, provided $ 654 mm in supplier credits for the project, which Sharif sees as a first step towards a badly-needed modernisation and expansion of Pakistan's decaying national road network.
Tolls are expected to raise 2 bn rupees ($ 493,000) in the first year of operation in 1998, but some officials of the state-owned National Highway Authority (NHA) privately say receipts may not reach half the targeted figure.
The only multi-lane road in Pakistan's 228,206-km (142,628-mile) network is now a two-lane highway between the southern port of Karachi and the north-western city of Peshawar.
Pakistan expects to begin work this year on a 6-lane Peshawar-Islamabad highway for about 22 bn rupees, and it could be built in 2 to 3 years.
Sharif says his government also plans a highway between Lahore and Faisalabad, a major textile producing centre, and is considering a new Karachi-Peshawar link along the Indus River.
The Indus highway, estimated to cost 25 bn rupees, would reduce the road distance between Karachi and Peshawar by 400 km (250 miles).
To overcome its lack of cash, Pakistan wants international firms to build roads on a Build Own Transfer (BOT) basis under which they would recover their investment through tolls and later transfer the roads to the government.
Railway officials say modernisation of railways can decrease the pressure on roads but at least 25 bn rupees are needed up front to get 25 more engines for additional capacity to carry goods.
"Twenty five % of the rail capacity is under utilised but for proper utilisation you need more engines and carriages to compete with road transport," the official said.
He said Pakistan also plans to develop Keti Bandar, about 60 km (37 miles) west of Karachi in Sindh province and a port in Gawadar in Balochistan province, both on the Arabian Sea.
Hong Kong-based Consolidated Electric Power Asia Ltd (CEPA) has an agreement with the government to develop a port at Keti Bandar and a 5,260-MW power plant at a cost of $ 5.5 bn. The $ 1.8 bn construction contract has been awarded to a Japanese-American consortium.
The port was to be developed in 3 years and ships with a cargo handling capacity of 70,000 tonnes could berth at 14 planned jetties.
The official said development of Gawadar port, which requires a detailed feasibility study, depends on a road network which does not exist. "At least 20 bn rupees are needed for roads to makefull utilisation of Gawadar that would provide a link to Turkmenistan," he said.
Power sector needs $ 50 bn
Pakistan, with an installed capacity of 12,530 MW of electricity, faces a gap of about 1,500 MW during peak periods and needs an estimated $ 40 bn investment in power generation and $ 10 bn for laying transmission lines. Nobody in the government knows where the money could come from.
Among large projects to overcome Pakistan's energy needs is the 1,450-MW Ghazi Barotha power complex, including a barrage, with a World Bank loan of $ 350 mm. The cost, according to the last estimate in 1995, is $ 2.25 bn.
The project, which has been delayed because of resettlement problems, is co-financed by Japan, Germany, the Asian Development Bank, the European Investment Bank, the Islamic Development Bank and state-owned Water and Power Development Authority.
Pakistan plans to invest 20 bn rupees in 1997/98 (July-June) to install more telephone lines and modernise its exchanges. The money hasalready been set aside in the budget of state-run Pakistan Telecommunication Company Ltd.
A partly elevated light rail project of 13.7 km (8.5 miles) is planned for Karachi, Pakistan's largest city, at a cost of $ 666 mm as part of its mass transit programme.
This track is only part of the first priority corridor recommended by a 1986 city master plan that envisioned six such corridors with a total length of 87.4 km (55 miles).