Rawalpindi Development Authority (RDA) will not return the sureties worth Rs17.76 billion submitted by the Frontier Works Organization (FWO), as the contractor did not start the work on the Nullah Leh Expressway in due time.
This was stated by the RDA in its reply submitted in the court of a civil judge to a suit filed by FWO asking for the return of their bank guarantees after the authority shelved the project.
In its comments, the civic authority said that the multi-billion project started in February 2008 and the contract was awarded to FWO. “But the contractor did not carry out any work till the project was officially discarded in October last year,” the RDA stated.
The development authority said that it can legally confiscate Rs436 million deposited by FWO in National Bank of Pakistan (NBP) in the name of the RDA. This amount deposited after the contract to construct Leh Expressway was given to the FWO in 2008.
Judge Sardar Hamid Hussain, however stopped the RDA from cashing the bank guarantees till the case filed by FWO is decided; the hearing was suspended until Thursday, next week.
Additionally, the RDA alleged that the FWO, the official contractor of Pakistan Army, had been harassing the authority and had told the NBP to not give the money to the authority.
RDA said it paid Rs218.2 million in advance to the FWO to carry out the initial work on the project. The RDA said that the financial dispute was pending with National Engineering Service of Pakistan (NESPAK) for the engineering and feasibility services they provided under the contract.
FWO should also return the advance payment, as it did not carry out any work, the RDA said. Moreover, it is also trying to hold on to the securities, added an official.
On the other hand, FWO, through their lawyer Asad Rajpoot, maintained that they dragged RDA into litigation after the provincial authorities unilaterally terminated the development project.
In an official letter issued in January 2011, RDA intimated the FWO about the termination of the project and asked the organisation to submit their outstanding liabilities for the finalisation of the project accounts.
The contractor said that the abrupt ending of the project has caused huge a loss to the FWO as the organisation had already paid large sums of money to NESPAK, the consultants on the project for approval of the feasibility and other ground work.
Published in The Express Tribune, October 7th, 2011.
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