Contractor describe OLMT as a nightmare project

Writes to Planning and Development Department to counter negative propaganda

Imran Adnan August 27, 2018

LAHORE: As the Chief Justice of Pakistan (CJP) took suo motu notice of alleged nepotism in mega projects initiated by the Pakistan Muslim League-Nawaz (PML-N) government in Punjab during past five years, private contractors have started feeling the heat, The Express Tribune learnt on Sunday.

A private contractor working on the Lahore Orange Line Metro Train (OLMT) project has requested the Punjab Planning and Development Department (PD) to rescue him as he faces an uncertain situation.

OLMT most cost-intensive project in world

The OLMT contractor, Habib Construction Services (HCS) Chief Executive, Shahid Saleem, has written a letter to the PD chairman requesting the department to play its role in countering what he termed ‘biased and baseless propaganda’ against private contractors. He asked the department to brief the apex court about true context of the facts which are otherwise documented and available to defuse the myth of propaganda against the HCS.

HCS's letter made available with The Express Tribune reads: "Reference is made to suo motu hearing by the CJP as well as misleading propaganda made on social and electronic media during the last few months that the mega development projects in Punjab have always been awarded either of the five companies, including the HCS. The impression was given to malign the mind of the public so that they believe as if the tendering and award of projects is just done favouring one of the five companies with illegitimate manipulations. The bare fact is that this presumption is not correct and is based on misjudgment. The company succeeded in winning various contracts invariably through the competitive bidding process at very low rates and very nominal profit margins."

Saleem further highlights: "During the last nine years we have been able to secure projects amounting to Rs60 billion initiated by the government of Punjab. If compared with the government of Punjab's aggregate development budget of Rs3.50 trillion in last 9 years, our share is around 1.5%. During this period, we could get only one project from the federal government (NHA) of Rs1.5 billion. Apart from the construction projects of the government of Punjab and its bodies, HCS has successfully completed works mostly for the National Logistics Cell and Bharia Town during the last 9 years. HCS has successfully completed all the awarded projects. However, we have completed most of the landmark projects in cities especially in Lahore. Projects like iconic Azadi Interchange, Greater lqbal Park, signal-free corridor at Gulberg Main Boulevard and Jail Road flyover and underpasses, MM Alam Road, Kalma Flyover, noticeable packages of Metro Bus Islamabad and Multan and various interchanges at Lahore Ring Road.“

The letter stated that almost equivalent to half of the aggregate value of construction projects executed by the HCS for the government of Punjab is only one project, for instance, Lahore Orange Line Metro Train Package-1, with the state-of-the-art elevated viaduct and underground section.

CJP dismayed over OLMT delay

The HCS won Orange Line Package-1 by offering a rebate of 9.786% on the engineer's estimate. It is important to highlight that the engineer estimate envisages contractor's profit @10%. It is a fixed price contract and did not cover any escalation. The cost of Rs1.8 billion per kilometre for elevated viaduct was the lowest in the world.

However, due to errors, omissions in estimate and 22-month long stay order, the Orange Line Package-1 became a nightmare project due to wrong estimate of engineers, pre-printed BOQ prepared by consultants (rates were printed, written in BOQ and the contractor was only required to quote a positive, negative percentage in order to arrive at final bid price); non-provision of pre-casting yard in original tender, wrong offering of rebate (9.786%) by HCS at the time of tender (Rs2.172 billion were deducted from the bills); extremely difficult pilling and pile cap work from Boher Wala Chowk to Hall Road and in the underground section up to Jain Mandar which is around 1,000 years old part of Lahore; 22-month long stay order (very serious issue considering the fixed price contract); and interface work with Chinese contractor which had no provision in the contract."

Saleem mentioned in the letter that his firm continued executing the works without sabotaging the project by stopping or suspending the execution of works for want of funds. Required funding for execution of works was managed through bank borrowings in the form of running finance, inland LC's and extensive market credits. He said with all these difficulties, HCS completed the project. In completing this project, we are financially in a deep trouble and owe a huge amount to our creditors and banks. Currently, our deficit on Orange Line Package-1 is over Rs3 billion.

The letter added: "Some parts of the elevated section and major part of the underground section have been completed by us on two and a half years old rates. This area remained on hold on court orders for 22 months and works started in January 2018. We completed these works on original rates with no escalation and with a maintenance period of five years. Since concrete and steel are major items in structure, our reinforcement steel rate after withholding income tax is Rs97,437 per ton, concrete Class-A is Rs10,439 per CBM, brick masonry Rs6,520 per CBM and CS plaster rate is as low as Rs148 per SQM (Rs13.75 per SFT). We understand these low rates are sufficient evidence to counter the propaganda made against the HCS."

Contributing to the development of Punjab by the quality and fast-track construction is a matter of pride for HCS. We have proudly contributed more than Rs.5.5 billion to national exchequer on account of income tax and have been the source of employment for hundreds of engineers and technical construction personnel.

OLMT project to face further delays

It is requested that PD should play its role to help HCS come out of this uncertain situation looming around for no other reasons but a biased and baseless propaganda. The honourable Supreme Court may also be briefed in the true context of the facts which are otherwise documented and available to defuse the myth of propaganda against the HCS."

The contractor has also sent copies of the letter to the Communication and Works Department secretary, Lahore Development Authority (LDA) director general, and Punjab Mass transit Authority managing director.

Published in The Express Tribune, August 27th, 2018.


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