Financial close of M-6: NHA approves EOT
ISLAMABAD: The National Highways Authority (NHA) Executive Board approved the extension of time in achievement of financial close period for construction of Hyderabad-Sukkur Motorway (M-6) project on a build-operate-transfer (BOT) basis.
Official sources revealed that Captain Muhammad Khurram Agha (retd), chairman NHA presided over the meeting and considered the approval for extension of time in achievement of financial close period.
The board approved the concessionaire’s request for extension of time (EOT) for achievement of financial close for a period of four months w.e.f. June 1, 2023 to September 30, 2023 to the concessionaire M/s TECMC (Pvt) Ltd (SPV formed by the successful consortium M/s Techno-CMC-ACC) for construction of Hyderabad-Sukkur Motorway (M-6) Project on a BOT basis upon providing sufficient evidence of efforts made by the concessionaire for achievement of financial close under Section 10.4.2 of the concession agreement as verified and recommended by the PPP Wing, NHA.
The NHA and M/s Techno-CMC-ACC consortium, the contractor, signed the concession agreement for construction of Sukkur-Hyderabad Motorway (M-6) project –the largest Public-Private Partnership (PPP) project in the country with a total cost of Rs307 billion.
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The concession agreement for construction of M-6 project, which was earlier approved by the Public Private Partnership (P3A) Authority Board with total cost of Rs307 billion.
Under the transaction structure approved by the P3A Board, government of Pakistan will contribute only Rs9.5 billion over the construction period while the remaining project cost of Rs297.5 billion will be arranged by the private party through equity and commercial debt.
The private party will also pay minimum Rs408 billion to the NHA and estimated corporate taxes of Rs908 billion over the concession period. In addition, the project will be transferred to the NHA at no cost at the end of the concession period.
The motorway commonly known as M6 Motorway is the largest project under the PPP umbrella signed in the history of the country. The project was structured by the federal Public Private Partnership Authority (P3A) under the BOT mode in collaboration with the NHA.
The motorway spanning over a length of 306 kilometres will comprise six lanes. Designed to be constructed as a climate resilient project, the private party shall construct and operate the project for 25 years commencing from the date of execution of the PPP Agreement.
Given the shrinking fiscal space and the prevalent economic crunch, the project is a landmark achievement in the PPP sphere. The P3A team closely worked with the NHA to make this project a success.
The project will complete the missing link of north-south (Peshawar-Karachi) motorway network. The project is expected to bring economic benefits in terms of saving significant travel time, travel costs, and lifting socio-economic profile of the region.
Copyright Business Recorder, 2023