Govt green-lights three CPEC projects at 23% higher cost

Decision deepens transparency concerns

ISLAMABAD:

The government has cleared three infrastructure projects of the China-Pakistan Economic Corridor (CPEC) at an upward revised cost of $4.4 billion, a billion dollars more than the original approved price, further deepening transparency concerns regarding the award of contracts under the $46 billion package.

The government revised the cost within one year to one and a half year approval of these schemes by the country’s highest project approval authority amid transparency concerns expressed by the governor of the State Bank of Pakistan over financing and terms of the CPEC package.



It approved these projects just hours before Prime Minister Nawaz Sharif left for China on a two-day visit. The government showed unusual haste in approval of these projects and called a meeting of the Central Development Working Party (CDWP) on Sunday, an official holiday.

Even the planning ministry was not given sufficient time to technically evaluate these projects. The ministry received the project documents on Dec 10, just two days before their clearance from the CDWP.

These projects are vital for linking western China with the Gwadar port and fall on the eastern alignment of the corridor.

The CDWP has a mandate to approve up to Rs3 billion projects and to clear the higher cost mega schemes for final approval of the Executive Committee of National Economic Council (Ecnec).



Headed by Planning Minister Ahsan Iqbal, the CDWP cleared the 392-kilometre Multan-Sukkur section of the Lahore-Karachi Motorway at a price of $3 billion or Rs315 billion. The revised cost is Rs56 billion or $550 million more than cost at which the Ecnec approved this project in July last year.

The CDWP also cleared the 120km Havelian-Thakot road project at a price of $1.4 billion or Rs141.9 billion. In December last year, the Ecnec approved this scheme at Rs95 billion or $930 million. Within a year, the project cost jumped by almost 50%.

The CDWP approved construction of allied infrastructure in the Mullah Band area of Gwadar at a three-time upward revised cost of Rs2.2 billion. The CDWP had approved this project in November last year at price of just Rs835 million.

Instead of convening the Ecnec meeting for getting its final nod, the government immediately initiated the process for seeking anticipatory approval of the Ecnec Chairman, Finance Minister Ishaq Dar, sources revealed to The Express Tribune.



Within 24 hours of the CDWP meeting, the Cabinet Division received a request from the Communication Division to forward these projects for anticipatory approval of the finance minister, the officials confirmed to The Express Tribune. Dar is likely to give his stamp today (Tuesday).

One of the reasons given for upward revision in the cost was that the contractors placed bids at higher than approved prices, said a planning ministry official. He said due to limitations imposed under the framework agreement signed with China, the government did not have any option but to award these projects to Chinese contractors at whatever price they quoted in the bids.

Interestingly, the bidding was confined to just Chinese firms. The government had exemption from the Public Procurement Regulatory Authority from international competitive bidding of these projects.

Highly-placed sources said that a non-career diplomat in Beijing’s Pakistan Embassy played an underhand role in determining the cost of these two infrastructure projects.

Published in The Express Tribune, December 15^th, 2015.