Solving the infrastructure problem

Changez Shafi
Tuesday, Apr 09, 2024

Pakistan’s infrastructure deficiencies are well documented. The transportation sector suffers from congested roads, outdated railways, and insufficient connectivity between urban and rural areas.

The energy sector faces chronic power shortages and an overreliance on fossil fuels, leading to both economic inefficiencies and environmental degradation. Access to clean water and sanitation also remains a challenge for many Pakistanis, particularly in rural regions.

These infrastructure shortcomings have far-reaching socio-economic consequences and undermine Pakistan’s ability to compete on the global stage. Given the dilapidated current state and the need to develop new, more robust infrastructure, there is an argument to be made for the establishment of a federal infrastructure project authority modelled after the Infrastructure and Projects Authority (IPA) in the UK.

First, let us have a look at Pakistan’s dismal record of project delivery setbacks. There are numerous examples that highlight how Pakistan has long struggled with severe delays, cost overruns, and lack of transparency in executing infrastructure projects. The Hyderabad-Sukkur motorway, touted as the country’s largest public-private partnership (PPP) project with an approximate value of $1.2 billion, remains indefinitely delayed, as per recent reports.

The Diamer-Bhasha dam, a crucial hydroelectric project with a staggering cost of $14 billion, has encountered significant setbacks. Cost overruns totaling $1 billion within the first year of construction, coupled with construction delays reported in 2022, threaten to push its completion date back by several years to 2030.

Similarly, the Dasu hydro project has faced its share of challenges, including a cost overrun of $359 million and further delays expected until 2026-2027. While delays and cost overruns are a common theme in major infrastructure globally (eg the Hinkley Point C nuclear project in the UK has been delayed for another 14 years and GBP17 billion over budget), Pakistan cannot afford to have such significant inefficiencies in nearly all its major projects given the country’s dire economic circumstances.

The IPA model provides the blueprint for establishing a centre of excellence for infrastructure projects that reports directly to the federal cabinet. The functions and benefits of establishing such a body can be grouped into three key areas – support, transparency, and capacity building.

In terms of support, the IPA employs specialists across multiple competencies, including project finance, procurement, and project management. Government projects that are facing either a shortage of resources or inefficiencies in delivery lean on these specialists to improve performance. These experts not only lend their expertise to ongoing and future projects but also offer crucial advice to policymakers regarding the feasibility and practicality of their proposed infrastructure policies.

In the context of Pakistan, where provinces may set their infrastructure development policies and plans, a federal authority would serve as a vital arbiter, advising on the deliverability of provincial policies and initiatives.

Transparency in the delivery of projects is another key responsibility, and the IPA has developed tools and methodologies to enhance accountability and mitigate project risks. Assurance reviews are conducted regularly by the IPA to assess project progress and identify potential areas of concern.

The IPA publishes an annual report featuring delivery confidence assessments for each project, providing stakeholders with vital insights into project performance and viability. The authority also has a strong focus on data collection and analysis. Through its data collection from projects across the UK, the IPA can develop benchmarks that are used to assess investment cases for new projects, as well as establish project pipelines for the market.

This increased transparency can be instrumental in increasing private-sector investment, particularly for public-private partnership (PPP) projects, which is a key economic objective of Pakistan.

Capacity building represents another pivotal aspect of the IPA’s mandate. By establishing ‘project delivery’ as a distinct profession within the government and implementing a structured career path for civil servants involved in infrastructure project management, the proposed authority can ensure the country has qualified local resources to deliver its infrastructure needs.

The IPA is also tasked with developing standards and guidance documents for government departments involved in project delivery – examples include the ‘Project Initiation Toolkit’ and ‘Project Delivery Framework’. In Pakistan’s case, this would help bring consistency in projects delivered across provinces and sectors and also enable more efficient data collection to realize transparency.

While advocating for the establishment of such an authority, let us consider some constraints and potential counterarguments. The obvious challenge is cost, as setting up such an authority from scratch is likely to demand significant time and resources. There may also be a viewpoint that there are existing bodies that cater to some of the proposed authority’s objectives, such as the Planning Commission and the P3A (Public-Private Partnership Authority). However, this perspective overlooks the distinct advantages and specialization a dedicated authority to infrastructure projects would bring.

Unlike the broader mandates of the Planning Commission and the P3A, which encompass a wide range of sectors and development initiatives, the proposed authority would offer a concentrated focus on infrastructure projects, ensuring a high degree of specialization in managing, executing, and overseeing these projects. There are also provincial bodies, such as the Infrastructure Development Authority of Punjab (IDAP), dedicated to infrastructure projects.

However, as this is a provincial authority, it does not provide the benefit of central oversight of projects across the country. The IDAP specifically is also more focused on the tangible execution of projects, whereas the proposed authority would not directly execute projects but instead have an advisory role focusing on improvement in infrastructure project delivery.

It is also important to consider that, in addition to existing projects, Pakistan boasts an extensive pipeline of future infrastructure projects, including the ambitious China-Pakistan Economic Corridor (CPEC) and projects that are likely to be initiated domestically by provincial governments.

The Special Investment Facilitation Council (SIFC) has also indicated its objective of attracting significant investment from Gulf nations, much of which will be invested in infrastructure. This strong pipeline further strengthens the case for a federal body focused solely on infrastructure project delivery.

In light of Pakistan’s significant infrastructure needs and economic predicament, it is critical for our policymakers to engage in robust debate on how best to streamline and optimize project delivery, weighing the costs and benefits of potential avenues such as the IPA-like proposed authority.

This debate should consider not only the immediate benefits of the proposed authority or any alternative solution but also its alignment with Pakistan’s long-term development objectives and, importantly, the country’s fiscal realities.

The writer is a consultant for public-sector infrastructure projects. He tweets/posts @ChangezShafi