ISLAMABAD - Former Member Finance National Highway Authority (NHA), Shoaib Ahmad Khan, has suggested a set of recommendations according to which the road authority can become self-sustainable by generating Rs. 25-30 billion annually in addition to the generation of $500 to 700 million by outsourcing N-5—commonly known as G.T. Road.

Shoaib remained associated with the finance wing of the road authority for decades and he got retired recently as its Member Finance.

During an interview with The Nation, he has outlined few interventions for government to make NHA a self-sustainable organisation.

He said there are five areas where NHA could reduce financial burden on government on account of development expenditure in addition to the creation of new jobs for Pakistani youth.

There are two major areas of NHA’s revenue generation; toll tax and right of way (ROW). He recommended the monitoring of tolling operations by private sector. 

He stated that the traffic data in terms of numbers and classifications is paramount to any exercise in this respect and engagement of private sector to manage and monitor the whole operation along with use of technology and IT tools would not only increase the revenue figure substantially but also create new openings.

Income from ROW comprises rentals from all amenities using NHA right of way, laying of optic fiber by telecommunication sector, water and gas pipes, electricity lines etc., besides roadside hoardings. 

Regarding revenue generation through ROW, he suggested that NHA should lay its own optic fiber all along NHA’s road network and provide connections to the telecommunications sector as the idea has perhaps the highest potential in terms of additional revenue generation and employment creation. 

He further said that the preparation of a business plan for lying of optic fiber and its commercial utilization is need of the hour that may preferably be managed through a Special Purpose Vehicle (SPV), created in collaboration with major stakeholders.

To enhance the revenue from ROW, he also suggested preparing an inventory of ROW amenities to enable NHA to start billing to the existing ones and collect rentals and other charges.

To reduce the maintenance cost of existing road network, Khan also suggested optimisation of maintenance expenditure through non-traditional arrangements.

He said that the NHA should convert its maintenance operation on Toll, Operate and, Transfer (TOT) arrangement as this concept is relatively new and provides better solution to road infrastructure maintenance and development as compared to operating concession, securitization of revenue streams and floatation of Bond or Sukuk. 

He informed that the TOT option is being exploited in India and few other countries as well. He explained that under this option, all OM&M obligations remains with the concessionaire. 

He further elaborated the features of TOT according to which an upfront raising of lump sum funds from the concessionaire are available to be utilized for construction of new and viable projects. He informed that India has risen over $2.0 billion through this mechanism.  

The former member was of the view that the TOT option is also helpful to minimize funds wastage in the process of contracting of maintenance works and revenue collection activities while it would also streamline NHA’s contracting and contract management.

He said the TOT could attract international participation under a long-term legal framework, which would not only bring foreign investment in Pakistan but would also help boost business friendly environment in the country.

Regarding awarding procedure for development works, he suggested to adopt Engineering, Procurement and, Contracting {EPC} mode instead of traditional bill of quantities (BOQ) based contracting.  

He explained that under BOQ based contracting almost all the risks of time and cost over runs are borne by the employer/client. He said, though the EPC has some demerits also, yet the over-all merits of EPC outweighs BOQ based contracting especially in terms of cost and time over runs. However, the client has to ensure availability of funds according to the work plan.

Replying to a question regarding ill-conceived PSDP allocations, he has stated that the current PSDP portfolio needs to be carefully assessed in terms of priorities and requirements in comparison with available funds and their re-allocations should be made. 

In addition to aforementioned interventions, he has also suggested some structural changing and recommended right sizing of NHA on the bases of an objective review in this regard. 

He recommends reconstitution of National Highway Council and NHA Executive Board and revision of rules and regulations in the light of Security and Exchange Commission of Pakistan’s code of corporate governance.

While criticising placement of officers in NHA through deputation, he suggested that the practice must be discouraged because increases political interference only.

He expressed his hope that by discontinuing said practice, the moral of NHA’s own employees’ would be increase and a sense of ownership would also emerged among them. 

He suggested promoting existing employees or hiring from the market to meet human resource requirement of NHA. 

When questioned how he can summarise his suggestions, he maintained it could safely be concluded that the above said recommendations, if implemented, would certainly improve upon governance standards and performance in the Authority. He added moreover, it would ultimately result in enhancement of revenues, reduction in costs through improved contracting clearly defining risks and responsibilities.  

“A ballpark figure of Rs. 25-30 Billion annually can be made available through above measures by NHA, in 2/3year time. In addition, according to a preliminary assessment, the option of TOT on Major portions of N5 could also generate funds in the range of USD 500 to 700(M)”, he said.