Azerbaijan has offered a $1 billion loan to fund Pakistan’s $1.2 billion Sukkur-Hyderabad Motorway (M-6).
The proposal comes after Prime Minister Shehbaz Sharif requested $1.8 billion for two infrastructure projects during a recent visit to Azerbaijan. This includes the M-6 and a new $600 million Hyderabad-Karachi Motorway (M-9). However, disagreements among Pakistani government departments over funding methods have slowed progress.
National Highway Authority (NHA) officials outlined Azerbaijan’s two options. First, the State Oil Fund of Azerbaijan could deposit cash with the State Bank of Pakistan, which the federal government would then lend to the NHA. Alternatively, Azerbaijan could partner with the Islamic Development Bank (IDB) to directly finance the M-6, a critical link in Pakistan’s north-south motorway network.
Project Details and Funding Challenges
The Sukkur-Hyderabad Motorway, estimated at $1.2 billion, has gained momentum with a feasibility study by U.S. firm AT Kearney. The project, split into five sections, recently received approval from the Public Private Partnership Authority (P3A) Working Party. Bidding for the first two phases—Hyderabad-Tando Adam and Tando Adam-Nawabshah—will soon begin under a public-private partnership (PPP) model. The IDB may fund these sections pending an appraisal visit next month, while Azerbaijan could finance the remaining three.
Meanwhile, the new Hyderabad-Karachi M-9, costing over $600 million, aims to enhance trade corridors and reduce travel time. The NHA has engaged NESPAK for its feasibility study and design. However, Pakistan’s Finance Ministry opposes the cash deposit route, favouring direct NHA borrowing from Azerbaijan to avoid budget strain.
Pakistan already relies on $12.7 billion in cash deposits from China, Saudi Arabia, the UAE, and Kuwait to bolster its foreign reserves, paying interest annually due to repayment challenges. Azerbaijan previously pledged $2 billion in investments, but Pakistan struggled to propose viable projects. Deputy Prime Minister Ishaq Dar recently led talks to finalize investment plans by April 3, covering infrastructure, petroleum, trade, and IT.
Under PPP funding, the M-6 could take 2.5 years to complete, but due to fiscal constraints, reliance on the Public Sector Development Programme would further delay it. Critics note the government’s recent focus on a Rs436 billion Punjab motorway, sidelining the M-6.
