Around the world, ordinary investors already own toll roads, power grids, and pipelines the way they own shares. Infrastructure Investment Trusts in Pakistan, or InvITs, work on the same idea. Pakistan quietly wrote this exact mechanism into its REIT law. So far, nobody’s used it. This sits alongside a wider question we’ve explored before: can Pakistan’s infrastructure investment gamble on private and blended capital actually deliver where state financing has failed?
Every time a truck rolls down the Lahore–Islamabad motorway and pays its toll, that money goes somewhere. Right now, it mostly goes to a private contractor, under a concession agreement nobody outside government ever reads. In a handful of other countries, however, some of that toll would land in your dividend account instead. That’s because you’d own a sliver of the road.
That’s the whole idea behind an Infrastructure Investment Trust. Take a revenue-generating asset — a road, a grid line, a solar park. Wrap it in a listed trust. Then sell units to anyone with a brokerage account. Pakistan has never passed a law literally called an “InvIT Act.” But dig into the fine print of its REIT rules, and the machinery for exactly this is already sitting there, mostly untouched.
The pitch is simple. Government gets private capital without taking on more debt. Investors get inflation-linked returns once reserved for foreign lenders. And the road gets run like a business.
Not a New Idea: Everyone Else Is Already Doing This
Pakistan isn’t being asked to invent something exotic. It’s late to a party that’s been running for two decades.
India: The Next-Door Blueprint
| India · SEBI InvIT Regulations, 2014 India built a dedicated law for this in 2014, rather than bolting it onto REIT rules. IRB InvIT Fund now owns toll roads across the country, and India Grid Trust owns power transmission lines. Both trade on the stock exchange like any other listed stock, and both must legally hand back 90% of net income to unit holders every year. |
Australia: Selling the Roads to Build the Next Ones
| Australia · Asset Recycling Australian states pioneered “asset recycling”: sell an operating toll road into a listed vehicle, pocket the proceeds, then build the next road with the cash. Transurban, born from exactly this kind of privatisation, is now one of the largest toll-road operators on earth — a public company that started as a single Melbourne freeway. |
United States: Pipelines as Dividend Stocks
| United States · MLPs & YieldCos Master Limited Partnerships turned America’s pipeline network into something a retail investor can buy on a phone app. YieldCos did the same for solar and wind farms. Neither needed government to build anything new — they just needed a legal wrapper that let cash flow straight from the asset to the shareholder. |
Philippines: A Closer Comparison
| Philippines · Manila Water Concessions Manila split its water system into two concession zones and handed operations to private companies, while keeping public ownership of the underlying network. This governance model sits much closer to Pakistan’s own PPP concessions than India’s or Australia’s fully privatised assets. |
United Kingdom: The Cautionary Tale
| United Kingdom · Private Finance Initiative The UK’s Private Finance Initiative built hundreds of hospitals and schools this way in the 1990s and 2000s — private money upfront, public lease payments for decades after. It got infrastructure built fast. But it also became a byword for hospitals paying more over 25 years than the buildings were worth, because officials botched the risk allocation at the start. Worth remembering before anyone rushes a Pakistani version. |
The Fine Print: How Pakistan Actually Wired This In
Unlike India, Pakistan didn’t write a separate InvIT statute. Instead, it threaded the idea through its existing REIT Regulations, 2022 (S.R.O. 2067(I)/2022, notified 28 November 2022). These replaced the 2015 Regulations first amended to allow this back in June 2021. No clause is literally titled “PPP REIT.” That’s just the nickname the Securities and Exchange Commission of Pakistan and the press use. The actual legal engine comes down to four moves:
| Reg 2(1)(vi) & (xxiii) | Defines “Concession Agreement” and “Public Private Partnership.” This is the vocabulary everything else hangs on. |
| Reg 5(1), proviso | The hinge clause. It lets a REIT legally sit on top of a government concession, with SECP relaxations where the two clash. |
| Reg 15(2) & 16(2) | Loads extra duties onto the fund manager and trustee — they must keep the concession enforceable and honour its financing terms. |
| Reg 36(1)(vi) | The trust dies when the concession does. If government cancels the deal, the fund winds up with it. |
In plain terms: a REIT can sit on top of a government concession. The fund manager and trustee inherit extra duties to protect that concession. And the whole trust lives or dies with the underlying deal. It’s a workable legal skeleton. What’s missing is a body on it.
The Wider Pipeline: Where Pakistan Already Stands
Beyond the REIT rulebook, Pakistan has real project experience a trust like this could eventually plug into.
| $28.4B PPP infrastructure deals closed in Pakistan since 1990 | 5 countries already running this playbook — India to Australia | 90% of trust income must legally reach investors’ pockets |
A Federal PPP Authority With a Real Track Record
Set up under the 2017 PPP Act and strengthened by a 2021 amendment, the P3A has closed 108 infrastructure deals since 1990. Together, they’re worth roughly $28.4 billion — mostly direct private contracts under concession agreements, which is exactly the instrument a REIT would need to hold. This track record connects directly to what we’ve covered in our earlier look at Public-Private Partnerships in Pakistan. The same P3A pipeline that makes PPPs viable is what a REIT-based trust would ultimately draw from.
Motorways That Already Prove the Economics
Built as a Build-Operate-Transfer PPP instead of a government-to-government deal, the Sukkur–Hyderabad motorway was projected to cost roughly Rs 50 billion less than an equivalent CPEC-financed road. Lahore–Sialkot and the Lahore–Islamabad overlay were both delivered the same way. These are assets with exactly the toll revenue a trust would want — and a sharp contrast to the pattern of stalled disputes we documented in our earlier piece on Pakistan’s construction claims crisis.
A REIT Sector Already Gaining Momentum
Regulation now stretches to agriculture, mobile towers, and renewable energy alongside real estate. Licensing has surged too: five new REIT management companies and six new schemes registered in a single recent year. In other words, the machinery is being built. Pointing it at a toll road is the next step, not a new invention.
The Upside: Why This Could Actually Help
Local Savings Instead of Another Foreign Loan
Pakistan’s recurring balance-of-payments crises are, in large part, a story of financing infrastructure with external debt. A domestically listed trust turns rupee savings into project finance instead — provident funds, insurers, salaried professionals, the diaspora. None of it adds a single dollar of external liability.
Cash Trapped in Finished Roads, Unlocked
Once a motorway is built and tolling, government doesn’t need to keep it on its books. Sell it into a trust, as Australia has done for two decades. Then reinvest the proceeds in the next project, without new taxes or new debt.
A Real Inflation Hedge for Ordinary Investors
The stock market stays thin. Real estate stays mostly speculative. Against that backdrop, a trust throwing off toll and tariff income would be something genuinely new on the shelf — closer to a bond than a bet.
Forced Transparency in an Opaque Sector
Listed trusts publish audited financials and answer to public shareholders. That’s a level of scrutiny well above what typically surrounds government contracting or bilateral mega-projects.
A Formal Channel for the Diaspora
Remittances already rank among Pakistan’s largest sources of foreign exchange. A dollar-denominated infrastructure trust could give overseas Pakistanis a real stake in national infrastructure — instead of informal real estate purchases back home.
The Obstacles: Why It Hasn’t Happened Yet
Every country above learned this the hard way at some point. Pakistan’s version of the same lessons looks like this:
Market and Currency Risks
- A stock market too shallow to trade in and out of. Trusts need investors who can buy and sell freely. Without deep secondary trading, the whole pitch collapses into an illiquid holding — the opposite of what made India’s InvITs and Australia’s toll-road stocks attractive.
- Tolls are a political football. Unlike rent on a building, toll and tariff revenue in Pakistan is routinely frozen for populist reasons. It’s the same dynamic that produced circular debt in the IPP sector for years, a failure we’ve traced in detail in our piece on contract and commercial management in Pakistan. No investor trusts a cash flow a government can switch off.
- A currency that keeps moving the goalposts. Rupee volatility makes it hard to underwrite a 25-year return with any confidence, especially for diaspora investors expecting dollar-linked payouts.
Institutional and Legal Risks
- Thin bench strength. Pakistan has tendered PPP projects successfully, mostly in energy. However, structuring a bankable, investor-ready trust needs specialist legal and financial expertise that’s scarce outside a handful of firms.
- A trust deficit that predates the trust structure. Circular debt, IPP payment disputes, and cost overruns on public projects have left citizens and investors wary of government as a counterparty. Any fund would need court-enforceable guarantees to get past that memory. It’s exactly what tripped up the UK’s PFI hospitals when contracts were written loosely. And it’s the same credibility gap we’ve argued independent third-party verification could help close on the public-project side.
- Land disputes and a split rulebook. PPP law sits separately at federal and provincial level, while REIT regulation sits with the SECP. As a result, a project spanning both faces a genuinely tangled approval path, on top of the land acquisition disputes that have long slowed motorway and pipeline projects.
The Bottom Line: Where This Leaves Pakistan
Pakistan doesn’t need a new law to try this. The four clauses above, plus the P3A’s project pipeline, already form a working legal skeleton. What’s missing is one credible pilot. Take an already-tolling motorway, or a solar park with a stable power purchase agreement. Wrap it in a trust. Open it to public subscription, with guarantees strong enough to survive a change of government.
India’s InvITs and Australia’s toll-road stocks already answer the technical question — the model works. The real test left is different: can Pakistan’s institutions promise the stability that makes someone trust their savings to a toll road for the next twenty-five years?
| The model works elsewhere. The only open question is whether Pakistan’s institutions can earn the twenty-five years of trust it takes to make someone bet their savings on a toll road. |
