Army signs deal for purchase of 10 locomotives

Legality of $11.2 million deal not immediately ascertainable.

Our Correspondent July 20, 2012


The National Logistic Cell (NLC) – the logistics arm of the army – will purchase 10 reconditioned locomotives, costing $11.2 million, from Korean Rail (KORAIL) for freight operations.

An agreement to this affect was signed here on Friday by Director General of the NLC, Major General Junaid Rehmat, and KORAIL Vice President Paeng Jung Goang.

According to a statement issued by the Ministry of Finance, the South Korean firm will deliver the locomotives to Karachi within ten months of the opening of the Letter of Credit. The government will make a 20% payment in advance, while the rest of the money will be paid on delivery.

At an additional cost of $1.4 million, the NLC will also hire the consultancy services of five Korean engineers for a period of two years, disclosed the finance ministry. It added that the NLC will also establish workshop facilities for maintenance of these locomotives. The Korean firm will provide a five-year performance warranty bond, equivalent to 5% of the contract price.

KORAIL will provide a type of locomotives already held on the inventory of Pakistan Railways (PR), except they are of a different gauge. KORAIL will overhaul these locomotives and change the gauge to suit PR’s track requirements. The NLC will also procure spare parts from the company for two years, the finance ministry said.

The finance ministry said NLC and KORAIL had been negotiating for the purchase of refurbished GMU-30 type locomotives since October 2010; suggesting the deal culminated after direct negotiations between the buyer and supplier. The NLC has also expressed an interest in procuring more locomotives next year, as KORAIL will be phasing out another 46 locomotives then, the finance ministry disclosed.

It was not immediately ascertainable whether the NLC had floated a tender to procure the locomotives – a requirement under the Public Procurement Regulatory Authority Rules, which aim to ensure transparency in public deals. It was also not clear whether the five Korean engineers have been hired as consultants after due process. Finance Minister Dr Abdul Hafeez Shaikh, who witnessed the signing ceremony, was not available for comments.

The Public Accounts Committee (PAC) – the parliament’s accountability body – last week referred a case regarding procurement of 175 coaches by PR, without ensuring competitive practices, to the National Accountability Bureau for investigations. The total cost of these coaches was $92 million, and Pakistan Railways had to make modifications to its infrastructure to enable these coaches stop at its station platforms; the Railways secretary had briefed the PAC last week.

Published in The Express Tribune, July 21st, 2012.

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