Islamabad: The Economic Coordination Committee (ECC) has approved sovereign guarantees worth PKR 34.6 billion for the 69-kilometre Sialkot-Kharian M-12 Motorway to help the project achieve financial close under a revised financing structure.
The meeting, chaired virtually by Finance Minister Muhammad Aurangzeb, approved the issuance of new sovereign guarantees worth PKR 27.62 billion and the rollover of operational viability gap funding guarantees amounting to nearly PKR 7 billion.
The approved package includes PKR 17.4 billion for capital viability gap funding, PKR 10.3 billion for commercial debt and almost PKR 7 billion for operational viability gap funding.
The motorway project, being developed under a public-private partnership (PPP) model, was awarded in September 2021 to M/s Sialkot Kharian Infrastructure Management (Private) Limited, a subsidiary of the Frontier Works Organisation (FWO).
The federal government revised the PPP agreement in February this year following increased construction costs, inflation, higher financing costs and changes in the project scope. Under the revised agreement, the concession period has been extended from 25 to 29 years, while the concessionaire is required to achieve financial close within six months.
The project’s total financing requirement is estimated at PKR 89.7 billion, including PKR 45.7 billion from the federal government and PKR 44 billion to be arranged by the FWO subsidiary.
Under the concession agreement, the company will collect tolls from motorway users, while revenue-sharing with the National Highways Authority (NHA) will begin from the 11th year of operations or after the completion of debt servicing, whichever comes later.
Samra Zulfiqar, a real estate analyst at Zameen.com, is passionate about finding projects that offer buyers the best returns. Her keen insights spotlight the market’s most promising opportunities.
