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The Central Board of Revenue (CBR) is likely to charge minimum 5 percent customs duty, one percent withholding tax and zero-percent sales tax and income tax on import of equipment/material for the Karachi Mass Transit Trade Project.
Disclosing the details about the last meeting on Mass Transit Trade, sources said on Saturday that the CBR would give concessions to the investment made in the project in line with the exemptions given to independent power producers (IPPs). This includes zero percent sales and income tax, one withholding tax and 5 percent customs duty on all imported items.
The CBR will further study the incentives given around the world to encourage the investment in Mass Transit Systems on competitive basis. In this regard, the department will analyse the system applicable in Jordan.
Sources said that it has been decided to finalise all details pertaining to guarantees; duties/taxes incentives, provision/supply of gas, provision of required land, necessary permissions and other details by November 30, 2006. The final concession/implementation agreement would be signed by December 15, 2006.
During the meeting, Karachi City Nazim said that the Letter of Intent (LOI) had been issued to the BOT Company on October 14, 2006. He briefed the meeting on the contents of the LOI and confirmed that the BOT Company had signed the LOI as a token of acceptance.
It has been directed to the City District Government Karachi, the Consortium of BOT Company and the provincial government to expedite the project.
The Ministry of Finance has informed that it is examining the case pertaining to the sovereign guarantee of $121 million. A meeting would be convened with the BOT Company to deliberate upon the details of the sovereign guarantee.
Sources said that the sovereign guarantee would be provided on the ridership of the Mass Transit System in order to make it bankable. The BOT Company after going into profits would refund the used amount of the guarantee on the pattern earlier agreed in the Minutes and MOU entered last year.
The Ministry of Petroleum and Natural Resources opined that it has asked the BOT Company for the location where the gas was required. Moreover, it would be prudent if the BOT Company installed a "dual fire system power generation plant" for which the possibilities of providing both gas and furnace oil could be worked out. This would ensure uninterrupted supply of the required fuel for power generation.
The representative of the BOT Company said that they required 30 MMCFD gas. The Chairman reiterated that affirmative action was required from the Ministry. The concerned government department has assured all facilitation pertaining to gas supply under the project.
Sources said that the representative of ports and shipping opined that BOT Company should provide exact details and location of KPT land required for Mass Transit Operations.
The representative of the BOT Company informed that the exact location of the land duly marked on satellite imagery had already been provided to Port and Shipping ministry and the KPT. The ports and shipping ministry assured facilitation in this regard.
The representative of railways stated that there were four to six railway lines going to KBX, KPT and Wazir Mansion which need to be protected. The BOT Company should plan its Mass Transit alignment in such a way that these lines are not disturbed.
There was also 2.5 acres land in this same vicinity, which was under litigation with Karachi Stock Exchange (KSE). The case was in the High Court. Therefore, the railway ministry is not in a position to take any decision on that piece of land.
Prime Minister Secretariat stated that in view of the precious city land, maximum utilisation of space for depots, workshops etc should be at the Sohrab Goth side. It was also confirmed by the BOT Company that all main facilities like workshops, depots, etc were being planned to be located at Sohrab Goth side as no other land along this most congested corridor was available.
Sources said that the BOT Company should consider the local assembly/manufacturing of the light rail/mass transit equipment in Pakistan to make it a hub of engineering, particularly keeping in view the added requirements of Karachi end other mega cities of the country. The committee appreciated efforts of Karachi City Nazim to expedite the entire process within a record time.
The project basically involves import of vehicles/rail cars, automatic train control system, signalling system, automatic fare collection, rail track to provide alternative communication corridor to the public and relieving the rising traffic congestion in the city.

Copyright Business Recorder, 2006

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