ISLAMABAD: The National Assembly’s Standing Committee on Economic Affairs Division (EAD) has expressed concerns over the slow progress of K-IV Water Supply Project in Karachi, noting that only Rs10 billion has been allocated against the project’s estimated requirement of Rs78 billion.
A committee meeting was held under the acting chairmanship of Dr Mirza Ikhtiar Baig at the Parliament House on Wednesday. The panel observed that the significant funding gap could adversely affect the timely completion of the project and delay the provision of adequate water supply to Karachi. Emphasising the strategic importance of the project, the committee recommended that the Ministry of Water Resources and K-IV project director present a comprehensive briefing at its next meeting, covering the project’s current status, financial requirements, implementation timeline and the measures being taken to address existing constraints.
The committee also expressed reservations over the significant disparity in the estimated cost of the Lyari Elevated Freight Corridor (LEFC) project under the proposed financing arrangement with the Korean Exim Bank, compared to the estimate prepared by the National Highway Authority (NHA). The forum observed that the proposed financing would entail a project cost nearly twice that estimated by the NHA and emphasised the need to identify the most cost-effective financing option in the national interest.
Members were of the view that the Karachi Port Trust (KPT), being the principal beneficiary of the project, should actively explore viable financing mechanisms, including implementation through the public-private partnership mode. The committee was informed that under the proposed loan conditions, approximately 35 percent of the project materials and the contractor would be sourced from Korea.
After detailed deliberations, the committee recommended that the EAD secretary convene consultations with the NHA, Ministry of Planning, Development and Special Initiatives and Karachi Port Trust to develop a mutually agreed and financially prudent financing model. The panel further emphasized that all available options, including financing through the Public Sector Development Programme, PPP framework, or any other viable mechanism, should be comprehensively evaluated to ensure implementation of the project at the lowest possible cost and on terms more favourable than those proposed under the Korean Exim Bank financing.
The committee was apprised of the progress on Tranche-III of the Central Asia Regional Economic Cooperation Project and was informed that following nearly three years of litigation, the NHA has awarded the contract for the project, with completion targeted by December 2027. While welcoming the resumption of the project, the committee expressed concern over the substantial delays and emphasised the need for strict adherence to the agreed timeline.
The NA panel observed that approximately one and a half years remain for project completion and stressed that any further delay could have financial and implementation implications. It therefore recommended that in the event the project is not completed within the stipulated timeframe, the government should initiate timely negotiations with the financing partner to secure any extension of financing on the same terms and conditions, thereby safeguarding the national interest and ensuring uninterrupted completion of the project.
The committee was briefed on global and regional economic developments, with the Ministry of Economic Affairs stating that Pakistan entered 2026 with improved macroeconomic indicators, including stronger reserves, lower inflation and an improved credit rating. However, the Middle East conflict and Strait of Hormuz disruption increased oil prices, raised Pakistan’s weekly oil import bill from around US$300 million to US$800 million, and pushed inflation to 11.7 per cent in May 2026, leading the State Bank to raise the policy rate to 11.5 per cent. The ministry warned that higher fuel and fertiliser costs and possible declines in remittances posed risks, though oil markets stabilised after the ceasefire and Islamabad Memorandum of Understanding.
The committee was also informed that Pakistan continues to participate in international and regional organisations, contributing to sustainable development, climate action, trade, connectivity and capacity-building initiatives, while benefiting from programmes such as the Colombo Plan.
