ISLAMABAD: The Asian Development Bank (ADB) is planning to arrange co-financing for Rs29 billion Faisalabad-Khanewal Motorway (M-4) project by chipping in newly established Beijing-based Asian Infrastructure Investment Bank (AIIB) and Islamic financing sources.
This is expected to be AIIB’s first financing to any development project when it starts operations as a gesture of goodwill to Pak-China friendly relations and support to China-Pakistan Economic Corridor (CPEC) Project.
The 184km M-4 project is outside the $46 billion CPEC financing initiative but would be critical part of the larger Lahore-Karachi Motorway Project being built under the CPEC.
The ADB is providing over Rs22bn financing for the M-4 project that would complete Faisalabad-Khanewal portion. First portion between Faisalabad-Gojra (58km) has already been completed and opened for traffic while second portion Gojra-Shorkot (62km) was currently in advanced stages of completion.
About Rs16bn has already been spent on the project including Rs240m this fiscal year. The funding shortfall of about Rs7bn has to be raised for the remaining 64km section between Shorkot and Khanewal. This portion is also under construction.
ADB’s Country Director Werner Liepach had a meeting with Finance Minister Ishaq Dar on Monday. “The AIIB assistance will be sought for the M-4 project, Shorkot-Khanewal section, near CPEC,” Mr Liepach was quoted by the finance ministry to have said during the meeting.
The ADB country chief also briefed the minister about the progress of the ongoing ADB portfolio in the country and plans relating to financing of projects in 2016.
He said the ADB’s total co-financing for Pakistan stood around $1.050 billion including $400 million grant commitments from Department for International Development (DFID) of the United Kingdom.
He said the ADB had also provided trade finance support for the private sector investments to the tune of $95m.
While sharing the details of ADB’s financing plans for the coming year 2016, Liepach stated that the Bank planned to provide financing of around $1.2 to $1.5bn, mainly in the field of infrastructure under the Public-Private Partnership (PPP) mode.
He said the establishment of Natural Disaster Risk Management Fund and its operationalisation will be one of the priorities of the ADB in 2016.
Dar recognised the ADB’s role and leading contribution for financing projects in various sectors in Pakistan. He said the government was now fully focused on growth and employment generation and the financing provided by the ADB and other multilateral institutions would play an important part in achieving these objectives.
Separately, Pakistan’s Executive Director to the ADB Sami Saeed also met the finance minister and briefed him on upcoming ADB’s annual meeting in the first week of May next year and on various matters related to Pakistan’s constituency.
The two decided to maintain close liaison over the next couple of months to ensure Pakistan’s effective presence and role in the ADB board of directors.