Under the strategic framework of National Trade Corridor Highway Investment Programme "Vision 2030" government has planned to raise the trade to gross domestic product (GDP) ratio from 30 percent to about 60 percent, which would be equivalent to $600 billion by 2030.
When programme fully is implemented, these efforts will save $5-$7.5 billion per annum that are currently lost because of inefficient logistics. To achieve this target, National Highway Authority (NHA) sources mentioned that key actions under the strategy would be improving trade competitiveness and export diversification.
Logistics are currently seen as a key constraint to enhancing competitiveness and attract private sector investment. They are also a bottleneck to increasing productivity as well as to deepening and diversifying the industrial base both of which are necessary to provide sustainable jobs for a growing population. Several actions are planned or underway to address the logistics and investment gap. One of these is a comprehensive road network investment programme, sources mentioned.
NHA sources stated that an enhanced road network will cut the time and cost of moving goods and services along the entire logistical chain. Specifically, government intends to double the road density from 0.32 km per-sq-km (km/km2) at present to 0.64 km/km2 by 2030.
In addition to improvements to physical infrastructure, the initiative includes meaningful policy and institutional actions aimed at providing a better enabling environment for investment, for industrial diversification, and for the logistics industry as a whole.
NHA sources said that Pakistan's domestic trade flows are concentrated in one major north-south transport corridor. The proposed actions, while aimed at making this corridor more efficient, will also have a major and broader impact on the performance of the entire transport sector and thus on the economy overall.
This comprehensive approach is embodied in a special initiative called the National Trade Corridor Improvement Program (NTCIP). The Government views NTCIP as a key success factor to the country's growth prospects, to inclusiveness, to employment creation and social service renewal, and to the execution of second generation sector and macroeconomic reforms.
NTCIP represents a flagship endeavour by the Government and the private sector to bring about better connectivity and trade facilitation. Beside roads, the initiative covers ports, railways, airports, customs clearing procedures, tariffs, and the trucking industry.
The rationale for NTCIP is embedded in and emanates from plans for growth, job creation, and trade, said NHA sources. Presently, the NHA is responsible for the operation, maintenance, and development of the national highway system. NHA manages 11,400 km of roads, of which 30 percent are already toll roads.
The efficiency of the road network has been constrained by slow moving traffic, poor quality surfaces, and non-vehicular traffic. Currently, it takes 72 hours to travel between Peshawar and Karachi, a distance of about 1,700-km. The investment in the backbone of the national trade corridor is expected to reduce this travel time to 36 hours after completion.
As a core component of NTCIP, NHA has developed the National Trade Corridor highway investment plan (NTC highway investment plan). It covers the corridor backbone from Peshawar to Karachi and the outlying links that connect Pakistan to the People's Republic of China and Gwadar Port in Balochistan. The initiative includes not only new road construction but also the improvement of over 3,500 km of roads, national highways, expressways, and motorways.
According to official sources, the Asian Development Bank (ADB) is an active partner of the Government in the road sector and is involved in policy formulation including the National Transport Policy.
ADB is currently supporting the engagement of an advisor to formulate a national trade corridor strategy. In view of this long-standing relationship in the sector, the Government has approached ADB along with other financing agencies to finance the investment plan for the medium term.
ADB's proposed share of the NTC highway investment represents about 20 percent of the total. Key sections of the motorway and expressway network will be financed through the National Trade Corridor Highway Investment Programme and key sections of highways will be financed through the National Highway Development Sector Investment Programme (NHDSIP) approved in 2005. The NTC highway investment plan has an estimated economic internal rate of return of 39 percent and a total average economic savings estimated at Rs 200 billion per year.
A road sector development framework (RSDF) was agreed with the Government in 2005. This road map addresses major policy and institutional issues. Some targeted milestones have been completed, others are on schedule, and some have faced delays.
RSDF has been updated to reflect current concerns and lessons learned from those delays and from other ADB projects in the sector. The sequencing of interventions is well focused, the package of modalities includes private and public sector actions, and the policy framework is defined and endorsed by the authorities.
The support components of the Programme are needed not only for best practice purposes in safeguards but also to underpin the reform momentum for the sector and for the RSDF. Specifically, under the Programme assistance will be provided to enable NHA's experienced team to manage the expanded portfolio of assets planned under the NTC highway investment plan. Various actions are also included to reinforce capacity development and thus the implementation of the RSDF.
To advance the concept of industrial diversification and commercial activity along the national trade corridor and to maximise traffic flows, a framework for spatial planning and investment planning along the corridor is required.
An NTC team with representatives from the private sector (eg, business groups and chambers of commerce), government agencies, and academia will be established for this purpose. This team would co-ordinate the development of an NTC highway business plan.
ADB will provide a technical assistance grant of $500,000 equivalent in conjunction with the Programme to develop a business plan for the motorways and expressways between Peshawar and Faisalabad-Khanewal. Meanwhile, ADB is providing support for private sector involvement in the road sector by pursuing pilot projects and advisory work.
In this support and other interventions, ADB's private sector operations department and public sector department will work together to assist the Government. Pilot projects will incorporate lessons learned in structuring and implementation from the recent public-private partnership (PPP) projects in the road sector in Pakistan.