Home »Top Stories » Cost of Hyderabad-Sukkur Motorway project to rise due to delayed start
National Highway Authority (NHA) has missed the deadline to begin construction of the Hyderabad-Sukkur Motorway project, which will engender a hike in overall cost of the project, it is learnt. The project was proposed to be completed in three years at an estimated cost of Rs 175 billion on build-operate-transfer (BOT) basis.

Former Prime Minister Nawaz Sharif had directed for start of construction work in the first quarter of 2017. However, due to complexity of the project, NHA missed the deadline and work is expected to begin next year ie 2018, senior officials at the NHA confirmed to the Business Recorder.

The NHA Executive Board has approved the procurement process for Hyderabad-Sukkur Motorway and agreed to issue Letter of Intent (LoI) to the China State Construction Engineering Corporation for the project.

The NHA Executive Board has cleared the project structure and advised the NHA to submit a project concept note to the Central Development Working Party (CDWP) and take them on board for arranging viability gap funding by the government of Pakistan in the form of buyer''s credit loan. To improve the viability of the project, a certain portion of the total project cost would be arranged by the concessionaire in the form of supplier/buyers credit. This portion of the loan shall be repaid by the GoP/NHA as per agreed terms and conditions, after construction period.

The remaining project cost shall be financed by the concessionaire, as (a) equity requirement - the successful bidder (sponsor) will have to invest minimum thirty per cent (30%) of the remaining project cost as equity, through a special purpose vehicle (SPV), which shall be incorporated specifically to undertake the project; and (b) Commercial loan - the successful bidder (sponsor) will have to arrange maximum seventy percent (70%) of the remaining project cost as debt. According to documents, the project will be given on lease for 18 years.

An advertisement was released in the national and international print media on October 10, 2016 inviting Expression of Interest (EoI) regarding pre-qualification of firms. In response to that, 10 firms/joint ventures submitted their EoI. Six international firms pre-qualified for the Hyderabad-Sukkur Motorway project.

The NHA bid opening/evaluation committee opened technical proposals on February 14, 2017. Subsequent to finalization of technical evaluation, financial proposals of all the three bidders were opened on March 7, 2017. Keeping in view the scrutiny of financial proposals of all the three qualified bidders emerged as China State Engineering Corporation-1st, Shandong+FWO+Sinohydcro JV-2nd and China Communications-3rd.

The NHA is undertaking construction of Peshawar-Karachi Motorway (PKM), a high-speed, controlled-access, modern motorway system. All the segments of PKM have either been completed or awarded for construction except Hyderabad-Sukkur Motorway link of PKM. Now NHA intends to undertake construction of Hyderabad-Sukkur Motorway (M-6) with 6-lane divided limited access facility on BOT basis. The 296-km long project will be 6-lane motorway with design speed of 120 km/h, having 70 bridges, 15 interchanges and 243 underpasses.

According to the Ministry of Planning, Development and Reform, Rs 2.5 billion have been earmarked for the Sukkur-Hyderabad section in the Public Sector Development Program (2017-18) while the project will be completed at a total cost of Rs 175 billion.

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