Govt refuses to revise $1.62b Orange Line Metro project
Provincial authorities fail to justify revision of PC-I which shows only minor variations
The Orange Line project has been facing delays since its inception due to multiple reasons. Now the revised date for the completion of the project is July next year. The federal government of the PTI has also ordered a thorough audit of the metro project. PHOTO: FILE
ISLAMABAD:
The federal government has refused to revise the $1.62-billion Orange Line Metro Lahore project of the China-Pakistan Economic Corridor (CPEC) after provincial authorities could not give a plausible justification for the revision.
The new Pakistan Tehreek-e-Insaf (PTI) government in Punjab had sent a revised PC-I - documents which encompass all aspects of a project including its cost and design - for the approval of the federal government. The planning ministry then called a special Central Development Working Party (CDWP) meeting to approve the revised PC-I.
The CDWP meeting was called on Friday this week, but it had to be postponed after preliminary scrutiny of the revised PC-I showed no major variations between the original and revised documents, sources said.
The CDWP has the authority to approve all federal and foreign-funded development projects costing up to Rs3 billion and recommends projects that are of higher value to the Executive Committee of National Economic Council (Ecnec) for final approval.
Provincial authorities had given a statement in the Supreme Court that due to change in the scope of the project, payments to contractors could not be made.
During a pre-CDWP meeting, it was revealed that the total project cost was the same - $1.62 billion - in the original and revised documents. However, there were minor variations in the cost and scope of civil works but these were not big enough that required complete revision of the PC-I, they added.
Planning ministry officials said in the original PC-I, the provincial authorities had $145 million (Rs17.7 billion at the current exchange rate) for contingency liabilities. They pointed out that minor variations in civil works amounted to an additional Rs10 billion, which was within the limit of the total project cost.
PC-I is revised only when there is more than 15% escalation in the overall cost of the project or major variations in the project scope which push the total cost up by 15%, according to the planning manuals.
Both these reasons did not exist in the case of Metro Line project. The Orange Line is funded by China under the CPEC framework. The last provincial government had claimed $195 million in tax exemptions in line with the tax relief available to other CPEC projects.
The Orange Line project has been facing delays since its inception due to multiple reasons. Now the revised date for its completion is July next year. The federal government has also ordered a thorough audit of the project.
OLMT project to face further delays
The allocation of $145 million for contingency liabilities was part of both the original PC-I as well as the loan agreement signed with a Chinese financial institution
Planning ministry sources said in order to cover up the whole mess, the provincial authorities deleted $145 million under the contingency head in the revised PC-I.
Punjab Mass Transit Authority Managing Director Sibtain Fazal Haleem was not available for comments despite repeated attempts.
Lawyers representing contractors have informed the Supreme Court that outstanding payments were hampering progress of the project.
The secretary finance and chief engineer in one of the hearings told the apex court that due to the change in the scope of work, the PC-I needed to be revised, according to a short court order in the case.
The court had ordered the fixing of timelines for fulfilling all procedural requirements aimed at completing the project on a fast-track basis and to avoid cost escalation.
During the last hearing held on August 30, Haleem informed the apex court that the question of payments to the contractors could be resolved quickly if the process of approval of PC-I was completed at the federal and provincial levels.
OLMT most cost-intensive project in world
On the basis of his assertion, the apex court directed all the stakeholders to submit an action plan with clear deadlines, which could ensure expeditious final approval of the revised PC-I.
After consultation with all stakeholders, an action plan was submitted in the apex court that required approval of the revised PC-I by the CDWP on September 14. After the CDWP approval, the revised PC-I was to be finally approved by Ecnec till September 24.
Due to this, the planning ministry had scheduled the CDWP meeting for September 28.
The court had nominated the managing director of the Punjab Mass Transit Authority as the focal person to coordinate implementation on the action plan.
Ministry sources said the bid to get the revised PC-I approved by the CDWP might be aimed at covering up other irregularities in the scheme.
Published in The Express Tribune, September 30th, 2018.
The federal government has refused to revise the $1.62-billion Orange Line Metro Lahore project of the China-Pakistan Economic Corridor (CPEC) after provincial authorities could not give a plausible justification for the revision.
The new Pakistan Tehreek-e-Insaf (PTI) government in Punjab had sent a revised PC-I - documents which encompass all aspects of a project including its cost and design - for the approval of the federal government. The planning ministry then called a special Central Development Working Party (CDWP) meeting to approve the revised PC-I.
The CDWP meeting was called on Friday this week, but it had to be postponed after preliminary scrutiny of the revised PC-I showed no major variations between the original and revised documents, sources said.
The CDWP has the authority to approve all federal and foreign-funded development projects costing up to Rs3 billion and recommends projects that are of higher value to the Executive Committee of National Economic Council (Ecnec) for final approval.
Provincial authorities had given a statement in the Supreme Court that due to change in the scope of the project, payments to contractors could not be made.
During a pre-CDWP meeting, it was revealed that the total project cost was the same - $1.62 billion - in the original and revised documents. However, there were minor variations in the cost and scope of civil works but these were not big enough that required complete revision of the PC-I, they added.
Planning ministry officials said in the original PC-I, the provincial authorities had $145 million (Rs17.7 billion at the current exchange rate) for contingency liabilities. They pointed out that minor variations in civil works amounted to an additional Rs10 billion, which was within the limit of the total project cost.
PC-I is revised only when there is more than 15% escalation in the overall cost of the project or major variations in the project scope which push the total cost up by 15%, according to the planning manuals.
Both these reasons did not exist in the case of Metro Line project. The Orange Line is funded by China under the CPEC framework. The last provincial government had claimed $195 million in tax exemptions in line with the tax relief available to other CPEC projects.
The Orange Line project has been facing delays since its inception due to multiple reasons. Now the revised date for its completion is July next year. The federal government has also ordered a thorough audit of the project.
OLMT project to face further delays
The allocation of $145 million for contingency liabilities was part of both the original PC-I as well as the loan agreement signed with a Chinese financial institution
Planning ministry sources said in order to cover up the whole mess, the provincial authorities deleted $145 million under the contingency head in the revised PC-I.
Punjab Mass Transit Authority Managing Director Sibtain Fazal Haleem was not available for comments despite repeated attempts.
Lawyers representing contractors have informed the Supreme Court that outstanding payments were hampering progress of the project.
The secretary finance and chief engineer in one of the hearings told the apex court that due to the change in the scope of work, the PC-I needed to be revised, according to a short court order in the case.
The court had ordered the fixing of timelines for fulfilling all procedural requirements aimed at completing the project on a fast-track basis and to avoid cost escalation.
During the last hearing held on August 30, Haleem informed the apex court that the question of payments to the contractors could be resolved quickly if the process of approval of PC-I was completed at the federal and provincial levels.
OLMT most cost-intensive project in world
On the basis of his assertion, the apex court directed all the stakeholders to submit an action plan with clear deadlines, which could ensure expeditious final approval of the revised PC-I.
After consultation with all stakeholders, an action plan was submitted in the apex court that required approval of the revised PC-I by the CDWP on September 14. After the CDWP approval, the revised PC-I was to be finally approved by Ecnec till September 24.
Due to this, the planning ministry had scheduled the CDWP meeting for September 28.
The court had nominated the managing director of the Punjab Mass Transit Authority as the focal person to coordinate implementation on the action plan.
Ministry sources said the bid to get the revised PC-I approved by the CDWP might be aimed at covering up other irregularities in the scheme.
Published in The Express Tribune, September 30th, 2018.