Pakistan Eases Bidding Rules for Karakoram Highway (KKH) Construction, Awards $2 Billion Contract to China. This strategically crucial project aims to strengthen the China-Pakistan land route. The Economic Coordination Committee (ECC), led by Finance Minister Muhammad Aurangzeb, approved a special rule allowing the bypassing of international competitive bidding for the Karakoram Highway (KKH) Construction.
The ECC reviewed the Ministry of Communications’ summary regarding the execution of a framework agreement between China and Pakistan on the realignment of the Karakoram Highway (KKH) Thakot-Raikot section under CPEC. After thorough discussions, the ECC permitted the Ministry of Communications and National Highway Authority to proceed with the Karakoram Highway (KKH) Construction in compliance with Public Procurement Rules 2004.
The framework agreement for the Karakoram Highway (KKH) Construction was signed in June 2024 during Prime Minister Shehbaz Sharif’s visit to Beijing. The agreement outlines that Chinese companies will handle the engineering design, procurement, construction (EPC), and supervision. China will provide a $2 billion loan for the Karakoram Highway (KKH) Construction, with Pakistan selecting a company from a list provided by China.
In a related development, the ECC approved a Rs 78 billion incentive package for commercial banks and exchange companies to boost foreign remittances, a move aimed at supporting the Karakoram Highway (KKH) Construction and other strategic projects. This package includes revisions in the Reimbursement of Telegraphic Transfer (TT) Charges scheme, which is expected to further enhance the flow of remittances into the country, indirectly benefiting the Karakoram Highway (KKH) Construction.
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Additionally, the ECC approved relaxing competitive bidding conditions for the hiring of foreign consultants for the Chakdara-Timergara road project, which is connected to broader infrastructure efforts like the Karakoram Highway (KKH) Construction. The Export-Import Bank of South Korea has provided a $49 million loan for this project.
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As Pakistan continues to face external financing challenges, these measures aim to ease pressure on the country’s foreign exchange reserves and ensure the successful completion of crucial infrastructure projects like the Karakoram Highway (KKH) Construction.
