Pakistan’s Infrastructure and M2 Motorway

December 21, 2009 at 4:37 pm (Economics, Pakistan) ()


By Riaz Haq

As Pakistan struggles to bring a sense of stability and security amidst daily carnage, it is important to recognize that there is more to Pakistan than meets the eyes of a casual consumer of the images and reports by the world’s media. For example, Pakistan is a developing country with functional bureaucracy, well-organized police force, democractic institutions and a powerful army. And Pakistan has more advanced infrastructure than its neighbors, including India. Among the modern infrastructure pieces in place in Pakistan are its motorway system, extensive road network, mobile telecommunications systems, airports, high-speed Internet system, extensive railroad network, gas pipeline etc. A British writer William Dalrymple who visited and compared India and Pakistan on their 60th anniversary described Pakistan as follows:

“On the ground, of course, the reality is different and first-time visitors to Pakistan are almost always surprised by the country’s visible prosperity. There is far less poverty on show in Pakistan than in India, fewer beggars, and much less desperation. In many ways the infrastructure of Pakistan is much more advanced: there are better roads and airports, and more reliable electricity. Middle-class Pakistani houses are often bigger and better appointed than their equivalents in India. Moreover, the Pakistani economy is undergoing a construction and consumer boom similar to India’s, with growth rates of 7%, and what is currently the fastest-rising stock market in Asia. You can see the effects everywhere: in new shopping centers and restaurant complexes, in the hoardings for the latest laptops and iPods, in the cranes and building sites, in the endless stores selling mobile phones: in 2003 the country had fewer than three million cellphone users; today there are almost 50 million.”



More recently, Alistair Scrutton filed a Reuters report about Pakistan’s infrastructure, particularly its 367 Km long M2 motorway that connects Lahore with Islamabad:

“Indeed, for sheer spotlessness, efficiency and emptiness there is nothing like the M2 in the rest of South Asia.

It puts paid to what’s on offer in Pakistan’s traditional foe and emerging economic giant India, where village culture stubbornly refuses to cede to even the most modern motorways, making them battlegrounds of rickshaws, lorries and cows.

There are many things in Pakistan that don’t get into the news. Daily life, for one. Pakistani hospitality to strangers, foreigners like myself included, is another. The M2 is another sign that all is not what it appears in Pakistan, that much lies hidden behind the bad news.

On a recent M2 trip, my driver whizzed along but kept his speedometer firmly placed on the speed limit. Here in this South Asian Alice’s Wonderland, the special highway police are considered incorruptible. The motorway is so empty one wonders if it really cuts through one of the region’s most populated regions.

“130, OK, but 131 is a fine,” said the driver, Noshad Khan. “The police have cameras,” he added, almost proudly. His hand waved around in the car, clenched in the form of a gun.

On one of my first trips to Pakistan. I arrived at the border having just negotiated a one-lane country road in India with cows, rickshaws and donkey-driven carts.

I toted my luggage over to the Pakistan side, and within a short time my Pakistani taxi purred along the tarmac. The driver proudly showed off his English and played U.S. rock on FM radio. The announcer even had an American accent. Pakistan, for a moment, receded, and my M2 trip began.”

Here are another western tourist’s impressions of M2 from nomadic-one.com:

A strange relief to get to drive 3 lane asphalt in such serene quietness! It was unreal, we had to pinch our arm if this was really happening. Is this Pakistan? We decided to spend the night at the 3rd big service area with restaurant, gas station, police and clean toilets. It was strange to see there was no trace of locals selling stuff on the curbs – something which is really normal in Pakistan. Probably these place are off limits to the small business men.

Going to India – something we have long looked out for. We’ve heard a lot about India from other travellers – good and bad experiences. One thing’s for sure – India must have a LOT of people, each and every traveller from India has mentioned this explicitly. With Pakistan and Nepal (1998) as context we’re curious and somewhat anxious how we will experience India. We’re not crowd maniacs and both appreciate a ‘bit of air’ between people. Anyhow India happened quicker than we expected – we left Islamabad on the 25th, the next day we already sat in the garden of Ms Bandari’s Guesthouse. The superb M2 motorway with overnight parking and the road to the Indian border was uneventful. We drove the canal bank road through Lahore a long drive on a straight road. But look carefully to find this road separated by a canal – it’s sign posted rather miniscule by “Wagah border”.

“The road to Amritsar was like wading upstream in extreme suicidal traffic – the independence day ceremony must be something special. It must be totally worth risking your life for this. Naturally we had our usual ‘end of the day – near dark – took the wrong turn in mega dense traffic’ exercise. Just to make our arrival in Amritsar a little bit more special. We arrived in the dark – asking directions many times. This way we came a few 100 meters closer to Ms Bandari’s guesthouse each time we asked. We nearly seen the golden temple by truck. Ain’t that a relaxed truck ride in the dark! Cool!
And yes, even with GPS coordinates of the place it’s still a nice puzzle to solve after a border crossing day like this.”

According to BMI research, Pakistan has experienced a high level of activity in its infrastructure sector in 2008. This has mostly been focused on the power sector and the road network. In addition, construction of housing has been a top priority. However, the global downturn is hitting Pakistan hard, and the BMI’s 2009 Annual Infrastructure Report for Pakistan is forecasting the construction industry to contract by 6.31% y-o-y in 2009. The power sector has been the major focus in Pakistan’s infrastructure sector in 2008. Years of underinvestment in electricity generating and distributing infrastructure came to a head in 2008, when there was not enough supply to meet demand, further exacerbated by lack of rainfall almost knocking out Pakistan’s large hydropower sector. It is currently estimated that there is a 3,300MW shortfall in capacity at peak hours; as a result, load shedding has been a common practice. In an attempt to combat the shortages, a US$30bn investment plan has been announced, which has seen the development of a number of projects. Construction started in 2008 on the 969MW Neelum-Jhelum power plant, which is being built by a consortium comprising Chinese Gezhouba Group Company and China Machinery Export Corporation. Construction of the Diamer Basha Dam, which will have a capacity of 4,500MW once completed, is expected to start in 2009. Within the transport sector, the roads have benefited from the majority of attention in 2008. This has been the result of the National Highways Authority’s plans to invest US$5.36bn into the sector. The plans benefited from a US$900mn multi-tranche loan from the Asian Development Bank. The main project being pursued is the National Trade Corridor, envisaged as a main thoroughfare connecting the north of the country to the ports in the south; it is estimated to cost US$6.58bn. Construction of housing has been a major feature in 2008. Residential construction is being carried out under the prime minister’s ‘mega housing scheme’ which involves the construction of one million low cost houses per year. Pakistan’s economy has been hit hard by the global economic downturn and BMI’s is forecasting real GDP growth of 2.5% y-o-y in 2009, down from 6.8% in 2007. In November 2008, the country received a US$7.6bn 23-month standby loan from the International Monetary Fund to “support the country’s economic stabilization program”. The move might help boost investor confidence in the short term; however, it may put off investors looking at long-term infrastructure investments.

The 2008 World Bank assessment says that Pakistan is one of the most water stressed countries in the world, and water resources are depleting rapidly. With its water infrastructure in poor condition, the report argues that Pakistan has to invest around Rs60 billion (US$1 billion) per year in reservoirs and related infrastructure over the next five years. In the energy sector, the country will face severe power shortages of around 6,000 megawatts by 2010. Similarly, inefficiencies in the transport sector cost the economy between 4-5 percent of GDP each year.

To overcome these constraints, the Government of Pakistan is tripling its annual infrastructure investment from an average of Rs150 billion (US$2.5 billion) to Rs440 billion (US$7.3 billion). However, the bank report points out that mega projects in the past have experienced frequent delays and cost overruns, illustrating a lack of capacity in the industry to plan, program, and execute large projects.

Many infrastructure projects in Pakistan, including power plants and motorways, are being built and financed on build-operate-transfer or BOT basis. Built on the BOT basis, the M2 motorway has already paid for itself and now generates revenue for Pakistan government.

Here is a video with pictures of Pakistan’s extensive roads network:

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: