Chinese firms to compete for eastern route contracts

ECC approves decision to award contracts to China on govt-to-govt basis

ISLAMABAD:

In a major step towards the execution of infrastructure projects under the China-Pakistan Economic Corridor, Pakistan on Wednesday approved the awarding of contracts for the construction of two eastern alignment schemes to Chinese firms.

The Economic Coordination Committee (ECC) of the Cabinet decided to grant the contracts for engineering design, procurements and construction to execute the 392-kilometre Multan-Sukkur section of the Lahore-Karachi motorway and the 120km long Thakot-Havelian section of Karakoram Highyway-II (KKH-II).



Since China is providing concessionary loans for both the projects, the contracts will be awarded in government-to-government mode, waiving the condition of international competitive bidding. However, there will still be a competition among Chinese state-owned companies and Beijing has forwarded a set of three names for each of the project.

The ECC, while approving the award of the contracts to Chinese firms, noted that the mechanism for such projects was already covered under article-II of the framework agreement signed by Pakistan and China in April, according to an official handout.

For implementation of the Rs95.4 billion KKH-II Thakot- Havelian section, China has forwarded the names of China Construction Company, China State Construction Engineering Company and China Civil Engineering Construction Corporation, according to National Highway Authority (NHA) officials. The NHA has been mandated to execute these projects and Rs20.5 billion from the current fiscal year’s budget have been allocated for this purpose.

For the Rs259.4 billion Multan-Sukkur section of Lahore-Karachi Motorway, Beijing forwarded the names of China Construction Company, China Civil Engineering Construction Corporation and Syno Hydro Company, said the officials. Rs50 billion have been earmarked for this project in the current fiscal year.

The winning firms will be picked up by end of this month, said the officials. They added the financial agreement with China Export-Import Bank will be signed by October and the firms will be mobilised to commence the construction work in the same month.

The ECC on Wednesday also approved the issuance of sovereign guarantees by the finance ministry in respect of syndicated term finance facility amounting to Rs7.5 billion for the power sector. The amount has been obtained for reducing the circular debt, which jumped to over Rs600 billion including Rs325 billion that the government has parked in a holding company.

The committee, meanwhile, deferred the approval of the automobile policy amid transparency concerns. Finance Minister Ishaq Dar directed the industries ministry to place the policy on its website and accommodate changes recommended by people.

ECC also extended the deadline for export of surplus wheat from Punjab and Sindh to September 30, 2015. It also approved the exemption of 5% sales tax on wheat bran.

Published in The Express Tribune, August 13^th, 2015.