MoR directed to start KCR project''s tendering process: ''third-party validation put in pending''

The Cabinet Division has directed the Ministry of Railways to go ahead with the tendering process of the Rs 128.5 billion Karachi Circular Railway (KCR) Project, pending third party validation of the project, to avoid further delay.
The Executive Committee of the National Economic Council (Ecnec) had earlier asked the Pakistan Railways to conduct third party validation of the much awaited KCR project while approving it in the council''s session on 3rd September. The validation of the project "Revival of KCR as Modern Commuter System" was made mandatory to ensure best design and assess cost escalation estimated by Special Assistance for Project Formation (SAPROF).
But to avoid any delay in the execution of the project, sources said, the federal government had decided to remove the condition of validation by western experts. They said the validation move was likely to further delay the project, as the modification and inordinate delay had already raised the project''s cost to $1.58 billion from the original cost of $ 872.316 million.
However, for the transparent and smooth execution of the project, the sources said the validation by a foreign country was needed for such a mega project. As the government of Japan was funding the important project the material mostly imported from the funding country was to be ensured as cost-effective, they added.
They said the Japan International Co-operation Agency (JICA), which had conducted different studies of the project with the guidelines of the World Bank had also raised no objection over the validation by a third party.
However, showing his unawareness regarding pending validation of the project, Ejaz Khilji, Managing Director, Karachi Urban Transport Corporation (KUTC) said the third party involvement would not affect the process of the KCR project. The KCR project was to be funded by the government of Japan through the Japan Bank of International Co-operation (JBIC). Tokyo had commissioned 100 percent funding for the project under "STEP Loan" at 0.2 percent mark-up rate for a 40-year payback time, including a 10-year grace period. The government of Japan had earlier promised to release $1.58 billion STEP loan to be used for the KCR project and it had commissioned a study under the aegis of Japan External Trade Organisation (JETRO).
They said KUTC would be the vehicle for the implementation of the project having on its Board-Directors the senior officials of Pakistan Railway, Government of Sindh and City District Government Karachi (CDGK).