May 11 - 17, 2009

Despite political instability as well as security concerns after a surge in Taliban activities, investors could inject Rs 208 billion into development projects being currently offered to the private sector, claimed Murtaza Satti advisor to the government on Infrastructure Project Development Facility (IPDF).

Speaking at a press conference in his office in Islamabad on Friday last, Mr. Satti said that the reason for this bold and encouraging behavior of investors is that there are international guarantees involved in the mode of public-private partnership.

Deploring the attitude of some government departments and senior bureaucrats, he said that they were discouraging the private investors, as they were not sure of the shares in the form of kickbacks in investment on projects under public-private partnership. Mr. Satti said that IPDF had plans to involve private sector investment in the chashma IV nuclear power project but the concerned government departments were creating hurdles in the involvement of private sector in development projects. Mr. Satti revealed that up to 40% of budgetary allocations for development projects were going down in kickbacks due to the rampant corruption of bureaucrats affiliated with the ministries and departments. This is the reason why they were not willing to develop projects on the basis of public private partnership. Besides the bureaucratic mentality is to keep hold of every thing even if they fail at the end of the day, he added.

Citing examples of the National Highway Authority (NHA) and Federal Board of Revenue (FBR), he said they developed new ideas for the NHA but bureaucratic hurdles were coming in their way. The IPDF, he said, worked out details for automation project in the FBR worth Rs7 billion but after selection of highest bidder the contract has not yet been awarded. He also came down hard on the Planning Commission (PC), saying that there were some remains of Shaukat Aziz regime that are creating hurdles in the way of vision outlined by the PPP government under leadership of President Asif Ali Zardari and Prime Minister Yousuf Raza Gilani. The government has also included Chashma Nuclear Power Project (C-4) into the category of PPP mode, he said.

The IPDF CEO explained that the Chashma-3 project was at advance stage so the government did not involve the IPDF in it. It was also told during the briefing that the government has transferred 11 development projects with cost of Rs208 billion on the mode of PPP in areas of municipal services, mass urban public transport, transport & logistics and office/industry sectors. The IPDF, he said, is also assisting the government in the structuring & financing of multi-purpose water reservoirs at the cost of $25 billion. IPDF has identified 16 projects from the PSDP 2008-09 for development under the PPP concept.

These projects amount 30 per cent of the PSDP totaling approximately Rs117 billion. He said there was no other option available before the government but developing water and power sector requirements. Owing to water scarcity, Pakistan is cultivating 22 million hectare against total potential of 59 million hectare. He said when the PPP regime by Benazir Bhutto opted to go for IPPs during her second tenure and people raised voice against it but the time proved that the PPP leadership took visionary steps otherwise half of the country could have been living in dark ages. Satti said Pakistan's infrastructure lagged behind compared to other regional states and in the wake of existing financial crisis around the globe there was need to exploit mode of PPP by involving private sector to bridge the financing gap. NHA and National Trade Corridor (NTC) projects have also been identified for development under PPP mode at the cost of Rs46 billion.

The projects in the pipeline for the IPDF are Chashma-4 worth Rs64.68 billion, Indus Highway Project Phase-III worth Rs6.56 billion, N-5 Highway Rehabilitation Project Rs15.1 billion, Peshawar Northern Bypass Rs3 billion, Sehwan-Khairpur-Rato Dero section Rs12.34 billion, Flyover on N-5 Khairpur Rs0.27 billion, establishment of Benazir Medical College Gujranwala Rs0.2 billion, establishment of cardiac surgery facility at PIMS Rs1.2 billion, institute of dentistry at PIMS Islamabad Rs0.33 billion, 43.5MW Jagran Hydropower project Rs5.35 billion, 14.4MW Jhing Hydropower project Rs1.28 billion, 16MW hydropower project Nultar-III Rs1.4 billion, 14MW hydropower project Nultar-IV Rs2.2 billion, addition of 3rd and 4th lane Kashmir Highway Rs2.2 billion, building for Pakistan School of fashion design at Johr Town Lahore Rs0.85 billion, and construction of NSPP headquarter at Islamabad Rs0.8 billion on which the private sector will be asked to invest in shape of PPP. It was also told that there are many projects, which are at the stage of financial close.