NHA Wants Procurement in Both PKR and USD for Indus Highway Project

National Highway Authority (NHA) has sought changes in the mode of procurement for the Indus Highway (N-55) additional carriageway project worth Rs. 44.7 billion, which was approved by the Executive Committee of the National Economic Council (ECNEC) two years ago, it is learned.

Official sources told ProPakistani that NHA has requested that a waiver may be granted and an amendment may be issued in the authorization which should state that “all procurement under the instant project will be in Pak rupees as well as in US dollars as per Asian Development Bank (ADB) guidelines”.

PC-I of Indus Highway (N-55) additional carriageway project (Shikarpur-Rajanpur Section) (length 221.95 Km) has already been approved by ECNEC on 28th September 2020 at a rationalized cost of Rs. 44,703.89 million. All procurement under the instant project will be in Pakistani Rupees out of a total cost of Rs. 40,233.50 million (US$ 241.27 million) and will be financed through an ADB loan under Multi Tranche Financing Facilities (MFF) and the balance cost of Rs. 4,470.390 million will be financed by the government of Pakistan.

NHA has informed that while procuring the construction services of 04 sections for the subject project, the Chinese Contractor of Lot-II has demanded a certain price in US Dollars and the Consultant also demanded remuneration in US Dollars for their International Expatriate staff which is permissible as per ADB guidelines.

According to ADB guidelines, the provision exists however, as per the Authorization issued on 21st October 2020, it is stated that: “The Executive Committee of the National Economic Council (ECNEC) considered the summary dated 04th September 2020 submitted by the Ministry of Planning, Development and Special Initiatives regarding Indus Highway (N-55) Additional Carriageway Project (Shikarpur – Rajanpur Section) (Length 221.95 Km) and approved the rationalized cost of Rs. 44,703.89 million.

“All Procurement under the instant project will be in PKR. Out of the total cost, Rs. 40,233.50 million (US$ 241.27 million) will be financed through an ADB loan under Multi Tranche Financing Facilities (MFF) and the balance cost of Rs 4,470.390 million will be financed by the Government of Pakistan.

“Annex-I – As per Authorization, a restriction was made that all Procurement under the instant project will be in Pak Rupees. Forgoing in view, it is requested that waver may kindly be granted & amendment may be issued in the Authorization which should state that “All Procurement under the instant project will be in PKR as well as in US Dollars as per ADB guidelines”.

NHA has highlighted the issue that taking into account the guidelines of ADB, it is requested that waver may kindly be granted & amendment may be issued in the Authorization which should state that “All Procurement under the instant project will be in PKR as well as in US Dollars as per ADB guidelines”.

The Planning Division has raised objections on NHA demand while saying that the stance of NHA has been examined and observed the position paper submitted by NHA for CDWP is deficient in necessary data such as the physical and financial progress/status of the project has not been provided. The background does not contain information regarding when the loan is signed, the status of the award of work, the cost of the contract, and modalities of financing.

The project was approved by the ECNEC in October 2020 and reconsider by ECNEC on 11.03.2021 through a position paper for approval of the new packaging of the project, as suggested by NHA. It may be clarified by the NHA why at that time this issue was not highlighted by the NHA.

Now NHA has come up with a Position paper, after a period of 2 years, to request for a change in the decision of ECNEC regarding the wavier may kindly be granted & amendment may be issued in the Authorization which should state that “All Procurement under the instant project will be in Pak Rs. as well as in US Dollars as per ADB guidelines”.

The reason for this delay should be provided. It is also not clear from the Position paper what will be the cost impact of the above change. Will the total cost of the project remain the same as per the cost approved by ECNEC? This aspect may be clarified by the sponsors, the Planning Division observed.