ECC Approves Rs34.6bn for Sialkot-Kharian Motorway

ISLAMABAD: The Economic Coordination Committee (ECC) has approved sovereign guarantees worth Rs34.6 billion for the 69-kilometre Sialkot-Kharian Motorway project.

The approval was granted at a meeting of the ECC chaired by Finance Minister Muhammad Aurangzeb. The guarantees are aimed at supporting the concessionaire in finalising the project’s financial arrangements under a revised financing structure.

The Sialkot-Kharian Motorway project was awarded under a public-private partnership arrangement to Sialkot Kharian Infrastructure Management (Private) Limited, a subsidiary of the Frontier Works Organisation (FWO).

The approved package includes Rs17.4 billion in capital viability gap funding, Rs10.3 billion in commercial debt and around Rs7 billion in operational viability gap funding.

The ECC also approved the issuance of Rs27.62 billion in new sovereign guarantees, in addition to rolling over Rs6.944 billion in previously issued operational viability gap funding.

The project’s total financing requirement stands at Rs89.7 billion. The federal government will contribute Rs45.7 billion, while the remaining Rs44 billion will be provided by the concessionaire.

The government amended the project’s public-private partnership agreement in February this year, requiring the company to achieve financial close within six months. The financing structure was revised due to higher construction costs, inflation, elevated interest rates and changes in the project scope.

Under the revised agreement, the concession period for the motorway has been extended from 25 to 29 years.

The minimum toll rates for the first year have been set at Rs4.1 per kilometre for cars, around Rs10 for minibuses, Rs13.7 for large buses and Rs23 per kilometre for heavy trucks.

Officials expect around 23,700 vehicles to use the motorway daily.