ISLAMABAD: Government has finalised a $3.11 billion 9-year investment plan for reduction in cost of doing business and to enhance competitiveness of the economy of the country, official sources told Daily Times on Wednesday.
To ensure required financing for the projects included in this plan the government has decided to it to place before the Friends of Democratic Pakistan as well donors at Tokyo meeting scheduled on April 17.
The investment plan seeks to upgrade Pakistans highways to neighboring countries with an estimated investment of $975 million, Railways net work expansion to neighboring countries with an estimated investment of $1.780 billion and up-gradation of ports and shipping as well as Pakistan National Shipping Corporation with an investment of $355 million, the official added.
The details of the plan available with Daily Times are
Roads: The plans seek to invest $125 million in two years on Lawari Rail Tunnel. To link Gawadar with China and Afghanistan, the investment required is estimated at $594 million for the next five years. Similarly, up gradation of Kara Kurrum Highway from Mansehra to Sazin some 258 kilometers has been estimated with an investment of $256 million in next 7 years.
Road sector plans seeks an investment of $212 million in first year, $148 million in second year, $143 million in third year, $225 million in fourth year, $216 million in fifth, $16 million in sixth and $15 million in seventh year.
Railways: This plan seeks up gradation of Quetta-Koh-I-Taftan section to link rail net worth with Iran with an estimated cost of 438 million in next four years. A new rail link for connecting Gawadar Port with Mastung and Quetta in 9 years time frame has been finalized with an estimated cost of $1.342 billion.
Ports and Shipping: This plan seeks to support for private sector to make investment in shipping sector with $100 million, developing capacity for capital and maintenance dredging (upgrading port handling capacity) with estimated cost of $50 million and $50 million for Pakistan National Shipping Corporation. This plan also seeks to invest $155 million in mineral development.
Reducing the cost of doing business: Improvement and modernisation of the transport system is important to Pakistans economy and its competitiveness. Through infrastructure improvements, including transport, the country aims to greatly reduce the cost of doing business. Transport contributes about 10 percent of GDP. Road transport accounts for 90 percent of national passenger traffic and 95 percent of freight traffic.
Pakistan has about 5.0 million vehicles on the roads, growing at about 8 percent annually. This includes about 250,000 commercial vehicles. The road transport industry is deregulated and predominantly in the private sector. Pakistans road traffic has grown at an average annual rate of 14.1percent during the twenty-year period between 1985 and 2005 (from 70,000 vehicle trips/day in 1985 to 277,000 vehicle trips/day in 2005). Pakistans inland freight and passenger traffic has grown at an average annual rate of 10.6 percent and 4.4 percent respectively during the ten-year period between 1991 and 2001. However, Pakistan Railways freight traffic has declined (by 48 percent from 11.8 million tons in 1985 to 6.1 million tons in 2005) and passenger traffic stagnated during this period. The countrys truck fleet mostly comprises obsolete, underpowered, and high emission vehicles. Often trucks are overloaded. Their speeds are consequently slow, ranging between 20 to 25 kph compared to 80-90 kph in Europe, and journeys take three times longer than in Europe.
Pakistan has a total road network of 260,000 km of which about 60 percent is paved. The road density is 0.32 Km/Sq. Km. This network has grown at about 4.2 percent annually over the past decade. The National Highway Authority (NHA) under the Ministry of Communications (MOC) is responsible for approximately 11,500 km National Highway and Motorway system (4 percent of the total) which carries 75 to 80 percent of Pakistans total commercial inter-city traffic.
The National Highway Authority (NHA) needs to spend about Rs.5.0 billion annually to simply conserve the network in its present condition. Over the past decade, NHAs maintenance spending averaged less than 6 percent of total expenditures and covered less than 25 percent of stable network needs. NHA has depended almost exclusively on transfers from the governments recurrent budget to finance its road maintenance expenditures. This has not worked, since these transfers have been inadequate.
Two major ports, Port Karachi and Port Qasim, handle 95 percent of all international trade, and 14 dry ports cater to high value external trade. A few oil pipelines about 2,100 km in length have a yearly pumping capacity of 6.0 million tons. Container dwell times 11 days on average are four times those in developed countries, and three times the average in East Asia. Of this, customs clearance alone takes 4-5 days as compared to 1.25 hours in Singapore. Port entry costs are 5-9 times more than some others in the region vessel call charges in Pakistan are $30,000, in Jebel Ali they are $6,700, and in Salalah, Oman, they are $3,900. In addition, the ports limited draught at 9-12 meters keeps the latest and most efficient ships from calling. Redundant dock labor costs trade $15-20/TEU.
Desired end-state: The desired end-state calls for rapidly reducing transport times and improving the sectors quality and efficiency. This applies to rail, road and the ports.
In the rail sub sector, governments priority is to improve the quality of freight services, rapidly improving delivery times, reliability and tracking information. Presently, PR takes 21-28 days to deliver upcountry at a distance of 1800 km, which is 4 to 7 times slower than in China and the US. Freight rates in Pakistan, at 1-2 cents/ton-km, offer no real advantage over road transport which costs the same. In contrast, China rail is 2-3 times cheaper than road. As a result, the railways have a very low and stagnant market share, carrying less than 5 percent of freight and 10 percent of passenger traffic.
