Asian Development Bank Flags Risk to $360 Million Highway Loan Amid Project Delays

The Asian Development Bank (ADB) has cautioned that a $360 million loan for Pakistan’s Carec Tranche III highway project could expire next year if work does not begin immediately.

The loan, approved under the Central Asia Regional Economic Cooperation (Carec) program, is meant for widening major sections of the N-55 Highway. However, the project has remained stalled for nearly eight months due to disputes over the bidding process, which were reviewed by multiple parliamentary committees and the Public Procurement Regulatory Authority.

In a letter to the Economic Affairs Division, the ADB warned that based on current progress, the funds may not be fully utilized before the December 31, 2027 deadline, which it described as final and non-extendable.

The Islamabad High Court recently directed authorities to award the contract without further delay, warning that continued stalling could lead to loan cancellation, higher costs and reputational damage for the country.

“We seek EAD’s support in assisting NHA to expedite implementation, complete pending procurements, and ensure full utilization of the loan proceeds within the MFF period,” the ADB stated.

The project’s total cost is estimated at Rs 170 billion, with the ADB providing Rs 108 billion and the remainder to be financed by the federal government. The National Highway Authority has stated that rebidding would cause further delays and risk missing the ADB deadline.

ADB has confirmed it has no objection to awarding the project to the lowest evaluated joint venture, covering four road sections from Rajanpur to Dera Ismail Khan.

Officials say swift action is now critical to ensure the loan is fully utilized and the long-delayed highway project moves forward. The delay has also raised concerns over cost escalation and potential damage to Pakistan’s credibility with international lenders.