Azerbaijan offers $1 billion loan to Pakistan for motorway project

Azerbaijan is willing to give a $1 billion loan to Pakistan for funding the $1.2 billion Sukkur-Hyderabad motorway (M-6), but Pakistani government departments remain divided over the mode of financing.

Prime Minister Shehbaz Sharif had sought funding for two motorway projects totaling $1.8 billion during his visit to Azerbaijan. These include the Sukkur-Hyderabad motorway and a new Hyderabad-Karachi motorway (M-9) projected to cost at least $600 million, Caliber.Az reports, citing Pakistani media.

Azerbaijan has proposed placing a term deposit with the State Bank of Pakistan or collaborating with the Islamic Development Bank (IDB) to fund the motorway directly.

The Finance Ministry opposes the cash deposit option, arguing that the NHA should borrow the funds directly. Meanwhile, Deputy Prime Minister Ishaq Dar has directed the finalization of investment proposals for infrastructure, petroleum, trade, and IT services by April 3.

The Sukkur-Hyderabad motorway is planned under a public-private partnership, with the IDB considering funding two sections, while Azerbaijan has expressed interest in financing the remaining three. If pursued via the public-private model, the project could be completed in two and a half years.

The government has recently prioritized a new Punjab-centric motorway at a cost of Rs. 436 billion, sidelining the Sukkur-Hyderabad project. However, Pakistan is also seeking Azerbaijani investment for a new six-lane M-9 Motorway to improve Karachi-Hyderabad connectivity.

Pakistan has struggled to attract fresh foreign investment due to political and economic instability, while China, Saudi Arabia, the UAE, and Kuwait have already placed $12.7 billion in deposits with its central bank.

By Khagan Isayev