The Asian Development Bank (ADB) will administer the UK’s grant and an additional US$100m loan provided by the Asian Infrastructure Investment Bank (AIIB).
The UK grant will enable construction of the remaining 64km section of the M-4 connecting Shorkot and Khanewal.
The agreement was signed between Pakistan’s secretary for economic affairs Tariq Bajwa and ADB country director for Pakistan Werner Liepach, in a ceremony attended by Pakistan’s finance minister Senator Mohammad Ishaq Dar, ADB vice president Wencai Zhang and the head of DFID Joanna Reid.
Reid said: “DFID and ADB are supporting the government of Pakistan to create regional connectivity, economic growth and stability in Pakistan. The agreement signed today is an important step in this direction.
“The UK’s collaboration will support Pakistan to improve road safety and to create an environment that will transform roads into economic corridors. This partnership will not only help Pakistan promote and expand trade with regional partners, but also to create more jobs and sustainable livelihoods.
“This partnership is a unique moment, as this will be one of the very first AIIB investments as a new institution. The UK is supporting the Government of Pakistan three times over through this project – as an investor in the ADB, as an investor in the AIIB and through a grant directly from DFID.”
The project is part of a 1,800km Central Asia Regional Economic Cooperation transport corridor.
Once completed, the transport project will help cut travel time between Karachi and Peshawar and link Pakistan with Central Asian countries, boosting regional trade and commerce.