ISLAMABAD: The Asian Development Bank has raised serious concerns that a 360 million dollar loan allocated for Pakistan under the Central Asia Regional Economic Cooperation Corridor Development Investment Programme Tranche Three could lapse without completion due to prolonged delays in project execution. The warning highlights growing risks to critical infrastructure financing amid administrative and procurement bottlenecks.

According to official correspondence, the loan faces potential expiry by December 31 2027 as the National Highway Authority has yet to commence work on the Tranche Three road project. The project involves widening key sections of the N55 Highway but has remained stalled for eight months because of controversies linked to the bidding process reviewed repeatedly by parliamentary standing committees and procurement regulators.

ADB officials noted that despite bids being opened in February 2025 and subsequently approved by the bank the process became entangled in scrutiny from multiple oversight bodies. The continued delay has significantly slowed loan utilisation raising the risk that funds may remain unused within the approved financing period.

The Islamabad High Court recently intervened directing authorities to proceed with awarding the contract without further delay. The court warned that continued stalling could trigger loan cancellation cost escalation and reputational damage to Pakistan’s public finances. It also rejected a petition by the Public Procurement Regulatory Authority declaring the matter infructuous.

The total cost of the CAREC Tranche Three project is estimated at Rs170 billion including land acquisition consultancy and taxes. Of this amount the ADB is financing Rs108 billion while the federal government is covering the remaining share. The lowest bid submitted for construction stands at Rs147 billion.

ADB has confirmed it has no objection to awarding the contract to the lowest evaluated joint venture bidder across four project lots spanning Rajanpur to Dera Ismail Khan. The bank stressed that the 2027 deadline is firm and urged the Economic Affairs Division to support swift implementation to ensure full utilisation of the loan and safeguard Pakistan’s development commitments.