The National Highway Authority (NHA) recorded a net loss of Rs294.86 billion in fiscal year 2025, while its outstanding loans rose to Rs2.328 trillion. The authority’s own Finance Division has called for a more sustainable business model, stronger revenue generation and tighter scrutiny of infrastructure projects to deal with its growing financial risks.
The Finance Division said the NHA remains a high fiscal risk entity. It cited its mounting debt, heavy financing costs, weak cost recovery and continued reliance on government support, even though revenue collection and operating performance improved in the first half of FY2026.
Revenue growth fails to offset heavy borrowing costs
According to the Finance’s Federal State-Owned Enterprises Annual Report 2025, the NHA’s FY2025 loss was slightly smaller than the Rs295.58 billion it posted in FY2024. The report noted, however, that the small improvement came alongside a sharp rise in revenue, while debt and financing costs kept pressing on the authority’s position.
Revenue climbed by nearly 85 per cent to Rs100.25 billion in FY2025, up from Rs54.15 billion a year earlier. Operating expenses, though, reached Rs214.59 billion, which left an operating loss of Rs114.34 billion before financing and other costs. The NHA paid Rs193.49 billion in interest on its borrowings during the year, compared with Rs155.36 billion in FY2024, an increase of more than Rs38 billion in a single year.
Outstanding loans stood at Rs2.328 trillion by June 2025, against Rs2.183 trillion a year earlier. The total included Rs1.450 trillion in Cash Development Loans from the federal government, which fund road construction, and Rs878.20 billion in foreign loans. The report put the authority’s interest burden at Rs1.430 trillion, up from Rs1.243 trillion, but it warned that this figure and annual interest payments are different measures and should not be treated as the same thing.
The NHA’s accumulated losses grew to Rs2.074 trillion from Rs1.798 trillion. Its assets were valued at Rs5.83 trillion and its liabilities at Rs3.88 trillion. During FY2025 it received Rs115.30 billion in loans and Rs17.11 billion in grants, and the report recorded total government outflows to the NHA of Rs132.40 billion. One bright spot was the operating-cost recovery ratio, which rose to 0.47 from 0.26, though it was not enough to prevent another large annual loss.
Operating loss narrows in the first half of FY2026
The NHA’s operating loss fell by nearly 45 per cent to Rs38.67 billion in July to December 2025, down from Rs69.98 billion in the same period a year earlier. The Finance Division’s performance review for that six-month window showed the operating cost-to-revenue ratio improving to 0.63 from 0.34. That figure still sat below the target of 1.0, the level at which operating revenue would cover operating costs under the assessment’s measure.
Operating revenue, excluding government grants, rose 47 per cent year on year to Rs47.95 billion. However, it was 41 per cent short of the Rs81.05 billion target in the authority’s business plan. Toll revenue increased by 58 per cent to Rs40.75 billion, helped by higher traffic and better collection, yet it remained 27 per cent below the Rs55.90 billion goal. Other income grew by 61 per cent to Rs22.11 billion.
Despite these gains, the NHA posted a net loss of Rs153.27 billion over the six months. That was around 19 per cent more than the Rs124.69 billion loss projected in its business plan. The authority also received government grants of about Rs4.63 billion during the period, which the review said showed its continued dependence on public money.
The review classified the NHA as a high fiscal risk entity, pointing to structural deficits, heavy debt-servicing obligations and inadequate cost recovery. It said cash development loans, accrued interest and FRL together amounted to roughly Rs3.8 trillion on the balance sheet. The summary, however, did not break down those components or explain what FRL stands for.
In the business-plan and performance evaluation, the authority received an overall score of 59 out of 100. The breakdown was as follows:
- Business plan quality: 18 out of 25
- Financial performance: 14 out of 25
- Governance and board oversight: 10 out of 15
- Operational efficiency and sustainability: 5 out of 10
- Capital structure and debt sustainability: 2 out of 10
- Risk management and stress testing: 2 out of 5
The assessment also noted that the NHA had submitted its business plan but had not provided a progress report for the review period.
Finance Division urges a more disciplined borrowing model
The review warned that continued borrowing to build road infrastructure could place a growing strain on public finances, especially as servicing existing debt becomes more expensive. It recommended a transparent business model that separates commercially viable motorways from roads built mainly to meet public-service needs. Where projects are unlikely to earn enough revenue, it said, viability-gap funding should be explicitly provided for in the budget.
The review also called for toll rates to be set through a credible financial model and cautioned against politically motivated decisions that could quietly add to the NHA’s liabilities. Every major project, it said, should be closely examined for construction costs, completion delays, financing terms and expected traffic. Public-private partnerships and Build-Operate-Transfer arrangements could help fund projects with sound traffic and revenue prospects, but they must not shift hidden risks back onto the government.
Other recommendations included rationalising toll rates, expanding electronic toll collection and developing non-toll income through service areas and the monetisation of land. The review urged reprofiling high-cost debt, exploring concessional refinancing and tying any new borrowing strictly to revenue-generating projects. It also asked the authority to aim for an operating cost-to-revenue ratio of at least 1.0. Future business plans, it added, should include corridor-wise traffic analysis, geospatial comparisons with other South Asian countries and non-financial indicators such as reductions in road accidents and fatalities.
The review cautioned that while the national highway network represents an asset worth trillions of rupees, an organisation that keeps borrowing to service old debt could turn that asset into a long-term liability for the state.
NHA officials defend the value of road spending
A senior NHA official, who spoke on condition of anonymity, said Pakistan needed to move away from costly road-building practices that made each kilometre more expensive for taxpayers. The official said financing was the authority’s biggest problem, adding that while the state wanted more roads and bridges, paying for them was becoming increasingly difficult.
NHA Member Finance Muhammad Azam said the authority’s investments remained vital for national connectivity and economic growth despite its financial challenges. “Sustainable financing reforms can strengthen its long-term financial position,” he said. Responding to questions about the finances, Azam said they should also be judged against the authority’s public-service role, noting that many highways were built to connect remote areas, support trade and improve access to essential services.
A few days earlier, NHA Chief Executive Officer Captain (retd) Asadullah Khan told a Senate standing committee that the authority had collected around Rs179 billion in toll taxes nationwide. He also acknowledged that the motorways no longer met the standards they once did, when Korean companies built them many years ago.
