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NHA Approves 57% Cost Escalation for Kharian-Rawalpindi Motorway Project

The National Highway Authority (NHA) Executive Board has recommended approving the revised PC-I cost of Rs. 169.323 billion for the construction of the Kharian-Rawalpindi Motorway project, reflecting an increase of approximately 57% from the initial approved cost of Rs. 108.41 billion.

The updated cost endorsed by NHA also includes viability gap funding (VGF) of Rs. 40 billion from the government. Moreover, the government will provide financial support if KIBOR exceeds 10% during the debt servicing period.

NHA Chairman Arshad Majeed Mohmand chaired the meeting which also cleared the submission of a project qualifying proposal (PQP) to the Public Private Partnership Authority (P3A) seeking requisite approval as per P3A Act.

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The 117.2 km 4-lane controlled-access motorway project was previously approved by ECNEC in January 2022 at a cost of Rs. 108.41 billion. This included government share of Rs. 36.112 billion and concessionaire share of Rs. 72.298 billion.

Three bidders had competed for the project and a Letter of Intent (LOI) was issued to begin construction work. However, the LOI was later rescinded by NHA Board over the bidder’s failure to clarify critical points.

To avoid excessive delays, bidders will now get a 15-day extension period to respond to any LOI observations, the Board directed.

The proposed motorway starting from Sialkot-Kharian Motorway junction at Kharian and ending at T-Chowk near Rawalpindi/Islamabad, will pass through Jhelum, Mangla, Dina, Sohawa, Gujar Khan, Mandra and other populated districts.

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