Pakistan waives off bidding condition for CPEC projects

Published: June 14, 2016
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The proposed 19km expressway will be constructed at an estimated cost of $140 million and connect the Gwadar Port with the Mekran Coastal Highway. PHOTO: AFP

The proposed 19km expressway will be constructed at an estimated cost of $140 million and connect the Gwadar Port with the Mekran Coastal Highway. PHOTO: AFP

ISLAMABAD: The government on Tuesday permanently waived off the condition of international competitive bidding in Chinese deals and approved to award the construction contract of Eastbay expressway to link Gwadar port with coastal highway to one of three Chinese bidders.

It also gave legal cover to gift four horses of high breed to royal families of Qatar and Saudi Arabia in a non-transparent manner. In its meeting, the Economic Coordination Committee (ECC) of the Cabinet approved the sale price formula of Re-gasified Liquefied Natural Gas (RNLG), passing on the cost of system’s inefficiencies and extra expenditures on import to the consumers. The ECC also allowed hand over of Heavy Mechanical Complex (HMC) to the military’s Strategic Plan Division (SPD), taking it from the Ministry of Industries.

Chinese railway company wins bid for Karachi-Lahore motorway

Headed by Finance Minister Ishaq Dar, the ECC made certain decisions that carry far-reaching implications for execution of the China Pakistan Economic Corridor (CPEC) in addition to setting the base for future RLNG-based projects.

The ECC, once for all, settled the issue of international competitive bidding in execution of the CPEC projects. It approved a report of a sub-committee, which establishes the federation’s authority to override Public Procurement Regulatory Authority (PPRA) Ordinance of 2002 in execution of strategic nature projects.

The subcommittee cited the Constitution’s Articles 90 and 99 that deal with exercising federation authority and conduct of business. The ECC allowed the Gwadar Port Authority to proceed with the procurement of one of the three listed Chinese Companies as well as preference for the use of the Chinese equipment, in accordance with the CPEC Framework Agreement, said the Finance Ministry.

The proposed 19km expressway will be constructed at an estimated cost of $140 million and connect the Gwadar Port with the Makran Coastal Highway, passing along the Eastbay of Gwadar city. Since China is providing interest free loan for the project, the contracts will be awarded in government-to-government mode, waiving off 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.

The competition will be among China Communication Construction Company, China State Engineering Construction Company and CATIC Civil.

Govt’s tight pockets could hamper CPEC projects

Horses gift

The government approved a gift of four horses to the royal families of Qatar and Saudi Arabia in a dubious manner. Each of the royal families will get two horses of high breed.

The horses have already been exported after Finance Minister gave anticipatory approval, as chairperson of the ECC.

He asked the ECC to regularise and give ex-post facto approval. The government did not circulate the summary among the ECC members.

HMC

The ECC approved transfer of HMC to the Strategic Plan Division (SPD). The Pakistan Atomic Energy Commission will administer the HMC on behalf of the SPD.

The HMC, which manufactures high-end engineering goods, was highly mismanaged by the Ministry of Industries.

The ECC assured that the HMC’s employees would be fully protected. It approved Rs500 million to cover essential expenditure of the company and paying salaries till the end of this month.

RLNG price

The ECC approved sale price formula of RLNG, which passes every kind of cost under the roof to the consumers including cost of inefficiency and leakages.

The sale price will be worked out by adding up delivered ex-ship price of the LNG, port charges, Sindh Infrastructure Cess, Pakistan State Oil margin of 2.5%, all charges of LNG Services Agreement including capacity charges, utilisation charges and retainage charges.

The sale price cost will also include SSGC’s margin of $0.025/mmbtu, transmission losses up to 0.5% and distribution losses to be charged at the actual level.

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Even the cost of laying any extra pipeline by the dedicated consumers will be made part of the sale price formula. For other consumers on distribution lines, an average Unaccounted For Gas (UFG) for the last financial year will be taken into determination.

The ECC directed that the price formula guidelines should be placed before Oil and Gas Regulatory Authority as policy guidelines.

Published in The Express Tribune, June 15th, 2016.

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Reader Comments (23)

  • Usman 786
    Jun 15, 2016 - 9:55AM

    Good news! Seems like the cheques that was deposited by china in the panama accounts of general and politician seemed to have cleared.Recommend

  • quatro
    Jun 15, 2016 - 10:44AM

    No bid = corruption – ain’t that complicated.Recommend

  • SB
    Jun 15, 2016 - 11:28AM

    Consequence of Non-competition- Cost likely to go up by 20-30 % Just wait for the per unit price to electricity to be produced under CPEC framworkRecommend

  • Sawaiz
    Jun 15, 2016 - 11:32AM

    @usman 786 u r behaving like a kid every country which provides interest free loan is given advantage over other countries thus is bears fruitful outcome in less money and exact equipment. This is done in every part of this world but u r youthiya how can u understand?? Recommend

  • Kashif
    Jun 15, 2016 - 12:03PM

    Just another way to make fast money. Shame, shame and more shame.Recommend

  • Acorn Guts
    Jun 15, 2016 - 12:06PM

    Horses for political safe havens, not a bad deal.Recommend

  • Mahesh Desai
    Jun 15, 2016 - 12:23PM

    So that is exactly what I had guessed. China ‘loans’ you 100 Rs. Then you give contract to their companies. The ‘loan’ directly goes from Chinese govt to Chinese company account. Chinese company uses 100% Chinese raw material, Chinese equipment, Chinese labour. So, effectively you get Rs. 0 cash and a Rs 100 loan (and maybe you will spend Rs 10 for security of project). And all this just to frustrate India and China hasn’t even agreed to have a naval base at Gwadar. What they call “Cutting your nose to spite other’s face”. Hope ET publishes.Recommend

  • Jun 15, 2016 - 12:45PM

    It will open new doors for corruption. Recommend

  • Naveen
    Jun 15, 2016 - 12:58PM

    And you thought only drone attacks violate your soveriegntyRecommend

  • Reddy
    Jun 15, 2016 - 1:55PM

    i am loving chinese here …what india cudn’t do to pakistan in decades,they are doing it in mere years,this is gonna be the future casestudy at our management institutions,pak done away with bidding means chinese can take the project cost to as high as possible..this will be the end game scripted by pak for it’s own demise …Recommend

  • Lahori
    Jun 15, 2016 - 1:58PM

    “The proposed 19km expressway will be constructed at an estimated cost of $140 million and connect the Gwadar Port with the Makran Coastal Highway, passing along the Eastbay of Gwadar city. Since China is providing interest free loan for the project, the contracts will be awarded in government-to-government mode, waiving off the condition of international competitive bidding.”
    1. Rs.14 billion for a 19km road. OK
    2. Projects would be given to a Chinese company Only. OK
    3. “Waiving off” international competitive bidding. OK
    N – League ZindabadRecommend

  • Someone
    Jun 15, 2016 - 3:03PM

    @Mahesh Desai:
    It’s not a public loan. They’re soft loans to contractors involved in the project. Hence, there is no public debt involved. You have your facts wrong I’m afraid.Recommend

  • roadkashehzada
    Jun 15, 2016 - 3:25PM

    @Mahesh Desai:
    i m humbled. my neighbour is so much worried about my loan and my well being.
    btw u forgot, by using 100% chinese material they ll build something which they wont take with themRecommend

  • Adnan
    Jun 15, 2016 - 3:52PM

    Good move !!!! CPEC will make Pakistan more advance than America !!! Recommend

  • Singh
    Jun 15, 2016 - 5:36PM

    @roadkashehzada:
    But somebody will pay them back that $ amount. Isn’t it?
    What you got?
    Any employment even?
    It was east India Co.Now China co. Recommend

  • genesis
    Jun 15, 2016 - 5:44PM

    @roadkashehzada:
    Since they have enough and more of it and there no markets available they are dumping not leaving it behind.Recommend

  • Mahesh Desai
    Jun 15, 2016 - 7:21PM

    @ Someone, so who is going to pay back the loan? The contractors, and no one from Pakistan (govt or either)?
    @roadkashehzada, yes we want all your Kasabs to have jobs so we can remain alive in Mumbai. And yes, Chinese will leave you loan as well. With open bidding, local material-labour-equipment, you would get more.Recommend

  • brar
    Jun 15, 2016 - 8:51PM

    @Sawaiz: Not every country but only one country, it is not kingship but democracy the opposition will tell u in the coming days .Recommend

  • vijay
    Jun 15, 2016 - 10:29PM

    Someone should study abandoned projects in Srilanka by Chinese companies Recommend

  • MikeDeJuor
    Jun 16, 2016 - 1:33AM

    $7Million/km is a little high. Even in China the average cost is around $5.3M/KM
    this without the cost of people relocation and other extras which is standard in China
    Pakistan is paying ($32.3M) PKR 3.3 Billion more than it shouldRecommend

  • gp65
    Jun 16, 2016 - 4:38AM

    @Someone: A loan at 18% interest in dollar terms is NOT a soft loan.Recommend

  • Sandip
    Jun 16, 2016 - 6:48AM

    @roadkashehzada: You think anything that the Chinese build would be in any condition to take away with them?Recommend

  • Munir Ahmad Kakar
    Jun 16, 2016 - 9:38AM

    It isn’t being said incessantly for nothing that our friendship is higher than Mount Everest. We all should be striving and doing our best to make this selfless friend happy all the time. These altruistic gestures from our friend should be responded to proportionally. I would suggest that taking into account the fact of priceless friendship that the cost of expressway be escalated to one billion/km to reinforce our commitment to this unselfish friendship.Recommend

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