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.
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.
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.
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.
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.
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.