ISLAMABAD: The Economic Coordination Committee cleared a fresh Rs. 27.62 billion sovereign guarantee on Monday for the Sialkot (Sambrial)-Kharian Motorway, a project that has spent nearly five years caught between design changes, a river study and a cost overrun that nearly doubled its original price tag.

Finance Minister Senator Muhammad Aurangzeb chaired the ECC meeting, which approved the guarantee to help the concessionaire achieve financial close for the M-12 motorway under the Public-Private Partnership model, along with a rollover of Rs. 6.944 billion in previously issued Operational Viability Gap Funding. The Ministry of Communications brought the summary before the committee, and the approval covers the project's construction on a Build-Operate-Transfer basis under what officials describe as a revised financing structure.


The number itself marks a sharp jump from where this project stood in its earlier years. Back in December 2021, the ECC approved just Rs. 8 billion in additional funding to keep the motorway's business plan on track. A few months before that, the government had structured a Rs. 6.944 billion sovereign guarantee through the National Bank of Pakistan specifically to give commercial lenders enough comfort to close financing. That guarantee alone has now been rolled over into Monday's much larger package a sign of how far the project's financing needs have grown since ECNEC first cleared it.

Sialkot Kharian Motorway

The motorway itself has changed shape since then, too. ECNEC originally approved a 69-kilometre, four-lane facility at a cost of Rs. 43.38 billion, built with structural provision for six lanes down the line. That plan didn't survive contact with the Chenab River. A hydraulic model study forced a realignment of the route near the river crossing, which delayed land acquisition and pushed the concessionaire to request a full renegotiation of the PPP agreement in November 2023. The Ministry of Defence added its own scope changes on top of that, and inflation and KIBOR spikes made the original numbers obsolete.

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By late 2024, the Special Investment Facilitation Council's Executive Committee had taken up the file directly. A traffic study commissioned during that review found the road would need two extra lanes by 2027 regardless, at an estimated Rs. 20.7 billion while building six lanes from day one would cost only Rs. 9.5 billion more, saving roughly Rs. 11 billion over the life of the project. NHA, the PPP Authority and the concessionaire's contractor eventually landed on a six-lane build with a base construction cost near Rs. 77 billion and a total project cost approaching Rs. 82 billion.

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That six-lane pivot is the backdrop against which Monday's guarantee makes sense. Without it, the concessionaire Sialkot Kharian Infrastructure Management, a joint venture between Frontier Works Organization and Sultan Mahmood and Co, has no path to closing financing with commercial lenders on the new cost structure.

The motorway extends the existing Lahore-Sialkot Motorway beyond Sambrial toward Kharian, filling a gap in the M-11/M-12/M-13 corridor that eventually links toward Rawalpindi. Once complete, it removes one of the last unfinished stretches on a route that's been under some form of government approval since 2021 even if getting there took a hydraulic study, a pandemic-era inflation spike and three separate rounds of ECC financing to make happen.