Khyber Pakhtunkhwa burdened with an additional debt of Rs. 2.74 Billion

Bureau Report
PESHAWAR: The financially troubled province of Khyber Pakhtunkhwa (KPK) is now facing an additional debt burden of 2.74 billion rupees. This debt, acquired under the pretext of promoting tourism, highlights significant financial mismanagement within the provincial government.
The Department of Tourism has taken a loan without proper authorization, adding to the province’s already substantial debt. Despite lacking the necessary approvals, a project initially valued at 6 billion rupees was illicitly extended to 8.74 billion rupees. This unauthorized extension has further strained the provincial treasury.
To legitimize these financial irregularities, the project director hastily revised the PC-1 to 10 billion rupees within three months. This revised plan faced two rounds of objections. However, the technical wing of the Planning and Development Department inexplicably issued a clearance certificate, ignoring significant discrepancies and irregularities. Documents reveal that in 2019, Khyber Pakhtunkhwa secured a 10-million-dollar loan from the World Bank aimed at developing integrated tourism zones at specific tourist spots. At that time, the exchange rate was 140 rupees per dollar, translating to 1.4 billion rupees. This fund was intended to cover feasibility studies, master planning, and road construction, with the projects to be operated through public-private partnerships. Two project management units (PMUs) were established for this initiative. One PMU within the C&W Department was responsible for overseeing road construction and other infrastructure works. The initial PC-1 approved 6 billion rupees for constructing 47 kilometers of road in two locations: 3.48 billion rupees for a 23-kilometer road in Mankial and 2.58 billion rupees for a 24-kilometer road in Thandiani. This approval was granted in January 2021.
However, by September 2022, the project costs soared to 8.74 billion rupees, with the road in Mankial costing 5.75 billion and Thandiani’s road costing 2.99 billion rupees. This represents a 2.74 billion rupee increase from the original estimate. To conceal these irregularities, the PMU submitted a revised 10-billion-rupee PC-1 to the Planning and Development Department, which returned it with over 100 objections. While responding to these objections, the PMU simultaneously prepared a 17-billion-rupee PC-1. This prompted the C&W Department’s Chief Engineer for Foreign Aid Projects to order an immediate halt to unapproved work and to seek additional funds from the World Bank and relevant departments.
The Secretary of Tourism raised further concerns, questioning the legal basis for the unauthorized additional 2.74 billion rupees and the lack of technical clearance for the extended contract. The PMU approached the World Bank, which refused further funding, suggesting adjustments be made from government savings due to the increased dollar rate. In April 2024, a revised PC-1 was sent to the Planning and Development Department, which returned it with 45 objections. The contract was awarded to MS Itimad Builders & Company, registered under Niaz Ahmed, son of Amir Maqam, and a woman. The Planning and Development Department has requested records of all contractors involved, highlighting discrepancies such as the delayed tender issuance in April 2022 for a project approved in December 2020, and an inexplicable increase in consultancy fees from 5.57 million to 15.10 million rupees. Despite these issues, the technical wing of the Planning and Development Department issued a clearance certificate.
Project Director Muhammad Zahid justified the cost increases, citing various stages of the project and the need to revise the PC-1 in accordance with World Bank conditions and contractor rates. Zahid explained that the project costs escalated through different phases and insisted that the revisions were necessary to meet World Bank stipulations. The unfolding of these events has raised serious questions about financial management and accountability within the provincial administration of Khyber Pakhtunkhwa.