PESHAWAR: The government of Khyber Pakhtunkhwa considering the construction of Dir and D.I. Khan Motorways on public-private-partnership (PPP) basis said White Paper on KP Budget for financial year 2022-23.

The provincial government has already completed the construction of 82-kilometer Swat Motorway Phase-I through PPP mod. The project has cost Rs.34.165 billion. The project has a concession period of 25 years, after which the asset will be handed over to the government of KP. Currently, the government has awarded the construction of Swat Motorway Phase 2 at a cost of Rs.36.404 billion. It runs from Chakdara to Fatehpur and has a length of 80-kilometer. The construction work will commence once the project reaches its financial close and the Viability Gap Fund (VGF) to make the project financially viable.

Dir Motorway has an estimated cost of Rs.36.00 billion with a length of 24.4-Kilometre whereas D.I. Khan Motorway has a length of 360-kilometre with an estimated cost of Rs.260 billion. Land for both these projects will be provided by the government of Khyber Pakhtunkhwa. Furthermore, the Government of KP is also considering the development of tourism sites such as, Hund (Swabi), Ghanool (Mansehra), Madaklasht (Chitral), Mankial (Swat) and Thandiani (Abbottabad).

A PPP model is developed to finance the construction and operations of the assets/facility, with funding provided by private partner (through Equity financing and commercial debt raising) and land provided by the public party (i.e., the provincial government) followed by upfront VGF and operational VGF contribution based on Risk Analysis and Project Cash Flow requirements and to further make the contract attractive for private sector participation.

The PPP is based on a long term, usually 20-25 years Build-Operate-Transfer (BOT) contract signed between the public and private party. Through this PPP, the government delegate responsibilities to a private sector entity to finance, design, build, operate and maintain the facility for the concession period.

Under the public-private-partnership, the government benefits from having the private sector both (i) raise the financing for and (ii) guarantee the high-quality construction, operations and maintenance of the facility. At the end of the concession period, the facility will be transferred back to the government in good working order with no additional cost.

Copyright Business Recorder, 2022