$360 Million ADB Loan for Pakistan Highway project at Risk of Lapsing
Islamabad – January 13, 2026 – A $360 million loan from the Asian Development Bank (ADB) earmarked for a crucial section of the Central Asia Regional economic Cooperation (CAREC) Corridor development project in Pakistan is in jeopardy of lapsing due to notable delays. The funds, intended for the Tranche III of the CAREC program, are at risk of going unused by the December 31, 2027, deadline if the National Highway Authority (NHA) doesn’t accelerate the widening of sections of the N55 Highway [[1]], [[2]].
Project Delays and Bidding Controversies
The primary cause of the delay stems from complications surrounding the bidding process for the Tranche III road project. For eight months, the project has been stalled, mired in controversy and subject to scrutiny from multiple parliamentary standing committees – a total of five – and also the Public Procurement Regulatory Authority (PPRA). These reviews centered on concerns regarding the selection of the winning bidder [[3]].
Despite initial approval of the bids in February 2025 by the ADB, the process faced repeated challenges. The Islamabad High Court (IHC) recently intervened, issuing an order to expedite the awarding of the contract, warning that further delays could lead to loan cancellation, escalating costs, and damage to Pakistan’s financial reputation.
Financial Breakdown and Project Scope
The overall project cost is estimated at Rs170 billion (approximately $600 million USD at current exchange rates), encompassing land acquisition, consultancy fees, and taxes. The lowest bid received by the NHA totaled Rs147 billion.The ADB is providing Rs108 billion (roughly $360 million) towards the project, with the Pakistani government responsible for funding the remaining balance.
The project focuses on widening key sections of the N55 Highway, specifically divided into four lots:
- Lot 1: Rajanpur to Jampur (57.5km) – Rs23.5 billion
- Lot 2: Jampur to Dera Ghazi Khan (64km) – Rs29.1 billion
- Lot 3: Dera Ghazi Khan to Tibi Qaisrani (111.7km) – Rs52 billion
- Lot 4: Tibi Qaisrani to Dera Ismail Khan (96.2km) – Rs42 billion
NHA’s Position and ADB’s Concerns
The NHA finds itself in a precarious position. Rebidding is considered impractical due to the time required to secure new approvals from both the ADB and the Executive Committee of the National Economic Council (Ecnec). The ADB has firmly stated that the december 31, 2027, deadline is non-negotiable.
In a letter to the economic Affairs Division (EAD), the ADB explicitly requested support in accelerating implementation, completing outstanding procurement processes, and ensuring full utilization of the loan proceeds within the stipulated timeframe. The bank emphasized the urgency of the situation and the potential consequences of inaction.
Controversial Bid Award and Court Ruling
The Ecnec ultimately approved the bids submitted by a joint venture consisting of NXCC, Dynamic Constructor, and Rustam Associates, despite the concerns raised by parliamentary committees and the PPRA. The NHA defended its decision, asserting that allegations of past non-performance against the lead partner had not been substantiated through official channels and that the firm had not been blacklisted by any relevant agency.
The IHC afterward rejected a petition filed by the PPRA challenging the award of the contract to the joint venture. The court’s ruling underscored the risk of losing the ADB financing and the potential for increased costs if the project were further delayed. The court warned that the PPRA’s actions could jeopardize the financial facility secured from the ADB.
Implications for Regional Connectivity
The CAREC program is a vital initiative aimed at fostering economic cooperation and integration across Central Asia. The N55 Highway is a critical component of this network,serving as a key transit route for trade and transportation. Failure to complete the Tranche III project would not only result in the loss of significant funding but also hinder regional connectivity and economic growth.
Looking Ahead
The next few months are critical for the NHA. Expediting the implementation of the Tranche III project is paramount to avoid the lapse of the $360 million ADB loan. Close collaboration between the NHA, the EAD, and the ADB will be essential to overcome the remaining hurdles and ensure the successful completion of this strategically significant infrastructure project. The situation highlights the challenges of navigating complex procurement processes and the importance of timely decision-making in securing and utilizing international development financing.
