ADB Approves $301 Million for Road Improvements in Pakistan's NW Frontier Province

MANILA, PHILIPPINES (19 November 2004) - ADB yesterday approved a loan package totaling US$301.2 million to improve the road network in North-West Frontier Province, Pakistan.

The North-West Frontier Province Road Development Sector and Subregional Connectivity Project will boost access of the rural population to economic opportunities and services and promote trade by enhancing connections to the Afghan border and Karachi ports.

The project will improve 212 km of provincial highways and about 700 km of rural access roads. It will also finance provincial policy reforms and institutional strengthening to improve management of roads and build capacity at provincial and district levels.

To improve subregional connectivity, about 310 km of national highways, including new access to Afghanistan, and border crossing infrastructure at two border points with Afghanistan will be constructed or improved.

The closest ports to landlocked Afghanistan and most of the Central Asian Republics are the existing facilities in Karachi and the under construction port at Gwadar. The bulk of traffic from northern Afghanistan and the Central Asia republics enter Pakistan at the Tokham border point and use the national highways to access these ports.

"With stability returning to Afghanistan and growing bilateral trade with Pakistan, the road corridor to be improved under the project will bring significant opportunities for North-West Frontier Province to benefit from the subregional trade and economic development," says Hasan Masood, an ADB Senior Transport Specialist.

"Improved connectivity ensures better and cheaper road transport that play an important role in providing access to economic opportunities including labor and product markets and helps overcome geographic isolation and cultural and social barriers."

The project will help about 1 million people living along the roads and 500,000 other road users, with about 900,000 poor people directly benefiting. Others will enjoy lower transport costs and induced economic and social development. It will also generate about 820,000 person months of job opportunities for unskilled laborers.

With a poverty incidence of 44%, far above the national average of 33%, North-West Frontier Province is the poorest of Pakistan's four provinces. Its 9,100 km road network is in poor condition, with more than 4,000 km unpaved. About a quarter of local communities lack basic motor vehicle access and 68% are not served by public transport.

Some 40% of villagers in the project area have to travel 6-10 km to reach a basic health center. Literacy levels are also low at 37%, with female children having less access to education, health care and nutrition than males.

"Providing road access to unserved rural areas has a direct impact on poverty reduction," Mr. Masood adds.

"It significantly improves the standard of living for rural populations, boosting literacy rates, school enrolments, immunization rates and consumption, while decreasing such indicators as infant mortality."

To support the sector reform agenda, the project will help establish a road asset management system, bring in performance-specific maintenance contracts, and involve roadside communities in rural road maintenance on a pilot basis.

The project will support road safety measures to mitigate the risk of an escalation in road crashes and injuries among local communities. Safety campaigns and education will be carried out in local communities and safety features built into the project roads themselves. Included also is a five-year service package for long distance truckers and the surrounding population to raise awareness on HIV/AIDS.

It is part of sequenced assistance to individual provinces by ADB for integrated development of the national, provincial, and rural access roads along with interrelated policy reforms in the sector. Such assistance also supports subregional cooperation by improving international road transport corridors and cross-border facilities.

Two ADB loans will meet 71% of the total cost of the project of $423.6 million equivalent. A loan of $296.2 million comes from ADB's ordinary capital resources, with a 25-year term, including a grace period of five years. Interest is determined in accordance with ADB's LIBOR-based lending facility.

A loan of $5 million equivalent comes from ADB's concessional Asian Development Fund, with a term of 32 years, including a grace period of eight years. Interest is charged at 1% per annum during the grace period and 1.5% per annum after.

Executing agencies for different components of the project are the province's Works and Services Department, National Highway Authority and Ministry of Communications. The project is expected to be completed around June 2010.

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