The Economic Coordination Committee (ECC) of the cabinet on Thursday approved exemptions from standard procurement rules for two major highway projects—the $2 billion realignment of the Karakoram Highway (KKH) under CPEC with China and the Chakdara-Timergara Highway with South Korea.
These exemptions were granted due to the tied credit involved in both agreements.
The ECC meeting, chaired by Finance Minister Muhammad Aurangzeb, also decided that foreign-funded projects should not be undertaken unless they can generate sufficient revenue in foreign currency to cover debt servicing.
This decision reflects growing concerns over the financial viability of such projects, particularly those in the transport and communications sectors, which often generate revenue in local currency while requiring debt repayment in foreign exchange.
For the KKH and Chakdara-Timergara Highway projects, the ECC authorized the National Highway Authority (NHA) to invoke Rule 5 of the Procurement Rules 2004.
This rule allows the bypassing of international competitive bidding when procurement rules conflict with international treaties or agreements, effectively limiting competition to contractors from the partner countries.
The committee expressed concern that while both projects are of strategic importance, they are unlikely to generate sufficient revenue to service their foreign debt. However, these projects were cleared due to longstanding commitments with China and South Korea.