Chaman and Torkham: Plan to build modern check posts suffers setback

NLC quoted 185% higher bid price for setting up border crossing points

ISLAMABAD: Pakistan has decided to reduce the scope of construction work on two modern check posts that will be set up along the border with Afghanistan after the sole bidder quoted $480 million for setting up the state-of-the-art facilities for cross-border movement of goods and people.

The $480 million price quoted by the National Logistics Cell – the military’s construction arm – was 185% higher than the originally conceived rates for establishing the state-of-the-art facilities at Chaman and Torkham borders.

The Asian Development Bank (ADB) that is providing $250 million loan for the project had estimated the cost roughly at $168 million.

“Due to a higher than the originally conceived cost, the military and civilian authorities have decided to change the scope and design of the project, making it more immediate needs-oriented,” according to officials.

The total cost of the project was $300 million, including the $50 million share of the government of Pakistan that will also have to look for additional financing sources owing to the higher cost of construction.



Because of change in the scope and design, the project faces a delay of about one year, in addition to escalation in its original price.

Pakistan is paying commitment charges at the rate of 0.15% on the undisbursed loan amount, which is common in almost every other ADB-funded project.

In December 2015, the ADB had approved $250 million loan for the construction of three facilities at Chaman and Torkham along the border with Afghanistan and at the Wagah crossing point on India border.

The loan became effective in December last year and since then the country has been paying the commitment charges.

Due to the scheme’s strategic nature, the government has set up the Integrated Transit Trade Management System Steering Committee headed by Finance Minister Ishaq Dar. Ministers for foreign affairs, defence, railways, communication and commerce are its members.

The committee acts as the highest decision-making authority for project implementation and provides overall guidance for all agencies involved in the implementation of the project.



The expected impact of the project is to increase value of export, import and transit trade, in addition to a smooth cross-border movement of citizens from Pakistan, India and Afghanistan.

As part of the Central Asian Regional Economic Cooperation (CAREC) initiative for trade facilitation, the project will also help the CAREC countries take advantage of more efficient trade routes through Pakistan.

The government has initially decided to complete work on Torkham and Chaman border check posts and engaged the NLC due to security concerns.

The ADB and Pakistani authorities had estimated the total cost of constructing the three facilities at $251.2 million, according to the project documents.

But the NLC quoted the bid price at $480 million for carrying out work on two check posts along the border with Afghanistan, according to officials involved in the project execution.

Torkham and Chaman are major transit stations for the Afghan Transit Trade. Over 80% of the Afghan transit cargo flows through Torkham while the remaining through Chaman, according to the ADB’s assessment.



The ADB had given a special waiver to allow the NLC to bid for the project as the military’s construction arm does not fulfil the Manila-based lending agency’s procurement guidelines.

As per the guidelines, only those government-owned enterprises can participate as a bidder which are legally and financially autonomous, and operate under commercial laws.

The NLC is not a legally autonomous body, although it enjoys partial financial autonomy and is managerially independent. However, the entity has the expertise in managing cross-border terminals and dry ports.

The ADB agreed to give the waiver due to the precarious security situation along the border with Afghanistan.

“After lowering of requirements, the NLC has reduced its bid to $340 million,” Project Director Dr Mohammad Zubair told The Express Tribune. He said the bidder would further lower the price after reviewing the revised design.

“We hope that the final price of engineering, procurement and construction work will be close to the portfolio of the project,” said the project director.

He said the original construction estimates were based on a conceptual design that had been prepared three years ago.

“The NLC’s original bid was based on detailed design of the project,” he said.  “Despite change in the scope and requirements, the posts will meet all necessary needs of the present time.”

Dr Zubair hoped that the engineering, procurement and construction contracts of the Torkham check post would be awarded by February next year and for Chaman by March.

However, the project documents showed that the original implementation period on those check posts had to be started in July 2016 and completed by December 2021.

He said work for the construction of a similar check post at Wagah border crossing point would be awarded before June next year on the international competitive bidding basis.