Govt approves Rs1.22tr projects towards term end

Govt approves Rs1.22tr projects towards term end

ISLAMABAD: The Executive Committee of the National Economic Council (Ecnec) approved approximately Rs1.22 trillion worth of eight development projects on Thursday, just days before the government’s constitutional tenure is set to expire.

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These projects included a 1,200-megawatt nuclear power project with a cost of Rs1.048tr ($3.742bn), which has experienced a 113 percent cost increase since October 2018.

An official announcement stated that the committee reviewed and approved the “Chashma Nuclear Power Project Unit-5 (C-5)” project of the Pakistan Atomic Energy Commission (PAEC) at a rationalized cost of Rs1.048tr with a foreign exchange component of Rs187bn and Chinese supplier’s credit of Rs821bn to install a 1,200MW nuclear power plant in Mianwali.

A few days ago, Prime Minister Shehbaz Sharif performed the project’s groundbreaking ceremony.

The Ecnec meeting, chaired by Finance Minister Ishaq Dar, was informed that the PAEC had requested approval for a Rs492.0bn project to be located within the Chashma nuclear power complex, where four lesser projects are already in operation. The Planning Commission did not approve the project on October 12, 2018, and requested clarifications and modifications.

Three years later, in February 2021, a revised project with an increased cost of Rs689bn was presented at a pre-CDWP (Central Development Working Party) meeting. The Central Power Purchasing Agency was tasked with analysing the impact of the project on the national tariff, specifically the cost of generation in light of the least costly plan for power generation.

On February 18, 2021, the PAEC was also required to submit a report on tariff model, loan repayment arrangement, and power evacuation from the 2,200MW K2 and K3 nuclear plants in Karachi, as well as the proposed K4 and C5 nuclear plants.

In light of the relevant policy, the sponsors were also instructed to update the feasibility study and finalise financing arrangements prior to the project’s approval, as well as to have it declared a “strategic project” by the relevant government forums.

The project cost was increased to Rs767.6 billion in August 2021, while the majority of the aforementioned conditions remained unmet. The cost against increased to Rs1.058tr when it was submitted to the CDWP for sanction last week, but many of the conditions remained unmet.

During Mr. Sharif’s recent visit to China, the PAEC reportedly finalised the project financing with Chinese firms for approximately $4.18 billion, which was subsequently reduced by approximately $700 million due to the intervention of top leadership from both countries.

Since the project’s groundbreaking has occurred, the Ecnec approved it in principle on Thursday; however, the Planning Commission has insisted that the PAEC satisfy significant conditions in the interim.

Thursday, Ecnec also approved the Ministry of Communication’s project for the dualisation of Rawalpindi-Kahuta Road (28.4km), which includes a four-lane bridge over Sihala Railway pass, Sihala bypass, and Kahuta bypass, at a revised cost of Rs23.55bn, with the federal and provincial governments financing the project equally. The operation will be carried out by the National Highway Administration (NHA).

The committee also approved the Infrastructure Upgrading of Karachi Shipyard and Engineering Works (KSEW) project of the Ministry of Defence Production at a cost of Rs10.69bn. The initiative also includes a foreign currency component worth Rs4.935 billion.

Ecnec also authorised the construction of the 45-kilometer Abdul Khel-Dhakhi-Kallurkot Road at a cost of Rs14,257 billion with no foreign currency component. The initiative, supported by the government’s ally JUI-F, will be carried out by the NHA in the Dera Ismail Khan district, with the federal and Khyber Pakhtunkhwa governments splitting the costs equally.

The forum also authorised a project by the Ministry of Water Resources to construct the Garuk Storage Dam in the Kharan district of Balochistan at an estimated cost of Rs27.75 billion. The initiative aims to mitigate and store Garuk River floodwaters, as well as provide irrigation water.

Ecnec also approved a Rs61,793 billion project of the water resources ministry. The initiative, entitled “Remodelling of Pat Feeder Canal System in Balochistan, District Naseerabad,” will be funded on an 80/20 basis by the federal and provincial governments.

In addition, Ecnec approved in principle a project of the Sindh government for the construction and re-construction of existing schools in Sindh affected by last year’s floods at a cost of Rs12.338bn, with the federal and provincial governments sharing the cost equally.

A Federal Board of Revenue project submitted by the Planning Commission was also approved by the committee. The “Investment Project Financing (IPF) Component of Pakistan Raises Revenue Project” costs Rs21.519bn ($80 million World Bank loan) and seeks to increase the tax-to-GDP ratio. In stages, mobile facilitation centres will be established as part of the initiative.

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