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Govt okays Rs1.22tr projects as it nears end of term

ISLAMABAD: The Exe­cutive Committee of the National Economic Council (Ecnec) approved eight development projects costing about Rs1.22 trillion on Thursday, just days before the government’s constitutional term is about to end.

These projects included a 1,200-megawatt nuclear power project worth Rs1.048tr ($3.742bn), whose cost has seen a 113pc escalation since October 2018.

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

Prime Minister Shehbaz Sharif has already performed the project’s groundbreaking a few days ago.

The Ecnec meeting, chaired by Finance Minister Ishaq Dar, was informed that the PAEC had sought the approval of the project to be situated inside the Chashma nuclear power complex, where four smaller projects are already operational, at the cost of Rs492.0bn. However, the Planning Commission did not clear the project on Oct 12, 2018, and sought certain clarifications and corrections.

In compliance, a revised project with an escalated cost of Rs689bn was presented to a pre-CDWP (Central Development Working Party) meeting three years later in February 2021. The Central Power Purchasing Agency was asked to analyse the impact of the project on national tariff, particularly the cost of generation in the light of least expensive power generation plan.

On Feb 18, 2021, the PAEC was also asked to submit a report in consultation with the power division regarding tariff model, loan repayment arrangement, power evacuation from the 2,200MW K2 and K3 nuclear plants in Karachi along with the proposed K4 and C5.

The sponsors were also directed to update the feasibility study and financing arrangements should be complete before the project is approved and also get it declared as a ‘strategic project’ from the relevant government forums in the light of the relevant policy.

The project cost was revised to Rs767.6bn in August 2021 while most of the above conditions remained unfulfilled. The cost against increased to Rs1.058tr at the time of its submission to the CDWP last week for clearance, but many of the said conditions still remained unmet.

Meanwhile, the PAEC reportedly finalised the project financing with Chinese firms at about $4.18bn, which was later reduced by about $700 million on the intervention of top leadership of the two sides during Mr Sharif’s visit to China a few months ago.

Since the project’s groundbreaking has been performed, it was approved in principle by Ecnec on Thursday, but the Planning Commission has insisted that the PAEC should in the meanwhile meet major conditions.

On Thursday, Ecnec also approved the Ministry of Communication’s project for the dualisation of Rawalpindi-Kahuta Road (28.4km), including a four-lane bridge over Sihala Railway pass, Sihala bypass and Kahuta bypass at a revised cost of Rs23.55bn on a fifty-fifty financing share by the federal and provincial governments. The project will be executed by the National Highway Authority (NHA).

The committee also approved the Ministry of Defence Production’s “Infrastructure Up-gradation of Karachi Shipyard and Engineering Works (KSEW)” project at the cost of Rs10.69bn. The project also has a foreign exchange component of Rs4.935bn.

Ecnec also approved the construction of Abdul Khel-Dhakhi-Kallurkot Road (45km) at the cost of Rs14.257bn without a foreign exchange component. The project, advocated by the government’s ally JUI-F, will be executed by the NHA in the Dera Ismail Khan district at a 50-50 cost sharing between the federal and Khyber Pakhtunkhwa governments.

The forum also approved a Ministry of Water Resources’ project for the Garuk Storage Dam to be executed by Balochistan’s irrigation department in the Kharan district at an estimated cost of Rs27.75bn. The project is aimed at mitigating and storing floodwaters of the Garuk River and providing water for irrigation.

Another Rs61.793bn project of the water resources ministry was also approved by Ecnec. The project, titled “Remodelling of Pat Feeder Canal System in Balochistan, district Naseerabad”, will be financed through federal and provincial governments on an 80-20 cost-sharing basis.

Ecnec also approved in principle a project of the Sindh government on the construction and re-construction of existing schools in Sindh affected by last year’s floods at the cost of Rs12.338bn, on a 50-50 cost-sharing basis between the federal and provincial governments.

The committee also approved a Federal Board of Revenue project submitted by the Planning Commission. The project, titled “Investment Project Financing (IPF) Component of Pakistan Raises Revenue Project”, entails a cost of Rs21.519bn ($80 million World Bank loan) and aims to enhance the tax-to-GDP ratio. Under the project, mobile facilitation centres will be established in a phased manner.