Fears of NAB and govt inaction delaying OLMT: contractors

Local companies working on the project say they have taken huge financial hits

Imran Adnan January 11, 2019

LAHORE: An ongoing accountability campaign and change of government in Punjab have caused hardships and losses for Lahore Orange Line Metro Train (OLMT) contractors.

Local contractors working on the project claim they have taken huge financial hits due to prolonged delays, wrong tendering processes and government mismanagement.

Speaking to The Express Tribune on Thursday, a local contractor highlighted that hardly any payment had been made to him or his peers since the change of government in Punjab. “Neither the caretaker regime nor the current government made any payment against outstanding bills of jobs completed since March 2018.”

He was grateful that the Chief Justice of Pakistan Mian Saqib Nisar took suo moto notice and directed the Lahore Development Authority (LDA) to make partial payment of the amount which it had deducted from the completed work. “The apex court ordered the authority to make Rs600 million and Rs400 million payments through the court to OLMT package-1 and package-2 contractors against bank guarantees,” he said. The contractor continued that the project could not be completed on time otherwise.

He disclosed that instead of making payments against outstanding bills, the authority deducted Rs1.4 billion and Rs1.3 billion from package-1 and package-2 contractors, respectively. It was the payment of completed works that had been approved. “The authority had made this payment after verification of approved rates and work quality,” he maintained. He said local contractors were completing this project at a fixed rate, which was around 60% of the Chinese contractors’ estimates.

Another contractor indicated that when the authority invited bids for this project, it was in the design phase. Later, various changes were made in the proposed design and the scope of the work was increased substantially. This created huge difficulties for local contractors as the government was not willing to budge from the fixed rate and entertain contingencies claimed by the contractors.

Responding to a question, he said that on the orders of the Supreme Court, the LDA was releasing an amount that had been paid once, but later withheld against bills of completed work. “Apart from this amount, an additional Rs3 billion is outstanding against the authority which is using delaying tactics to push contractors further against the wall,” he said.

He pointed out that earlier, the court directed the LDA to initiate an arbitration process as per the court verdict. Later, on the contractor’s plea, it told authority to go by the agreement. The court had also appointed an arbitrator, but the LDA expressed its reservations over this. “We highlighted in the court that the agreement already had arbitration clauses and had a proper mechanism to resolve disputes among parties.

A senior official of a local contractual company highlighted that there were only 20-22 companies in the world that had the expertise to construct elevated viaducts. The project had offered an opportunity to local construction companies to develop their capacity in this field. “We have developed our expertise, but now it seems that the LDA and the government are trying to kill these local companies by pushing them under heavy debt and losses,” he underlined.

Responding to a question, another local contractor told The Express Tribune that the project was originally tendered at around Rs50 billion. However, after repeated changes in design, a 22-month delay because of courts orders and extra work, the amount was closing in on Rs60 billion. Earlier, all government agencies were agreed on local contractors pricing, but now bureaucrats were feeling threatened by the National Accountability Bureau (NAB) and the ongoing accountability drive. “They prefer not to listen and work to avoid the sword of accountability,” he concluded.

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