Pakistan Railways has signed the Letter of Intent (LoI) with the lowest bidder firm, Bombardier, for replacement of old and obsolete signal gear from Lodharan-Khanewal-Shahdara section, after the Executive Committee of the National Economic Council (Ecnec) allowed the Railways Ministry to settle the dispute in the tender awarding process.
American Embassy had expressed reservations over the tendering process, which basically delayed the project. "We have signed LoI for the project, worth Rs 10720.38 million, with Bombardier and Islamic Development Bank (IDB)," sources said.
Ecnec in its decision on March 30, 2009 deliberated the issue in detail and consensus emerged that Ecnec was not the appropriate forum to approve the tender proposals of the Ministries/Divisions, and it should be finalised by the concerned Ministry itself.
According to official documents available to Business Recorder, Bombardier was the lowest bidder for Lodharan-Khanewal section at a cost of $32.897 million (excluding ATP), against $37.393 million of Marubeni (excluding ATP), mentioned by the committee of CDWP.
Bombardier is also lowest overall bidder, after adding the cost of ATP against one tender only, in accordance with the tender specifications at a total cost of $137.381 million against $149.581 million of Marubeni.
The option of adopting Marubeni/GEs ATP equipment was not considered viable, being new and untested, and its design involved serious risks for Railways which could negatively affect the whole project at the end. The two firms could not agree on the compatibility issue, and Marubeni did not provide additional guarantees in this regard.
The overall cost of Bombardier would further reduce from $137,381,176 to $129,496,782 after adjusting the duplicate and excess items, amounting to $7,884,394, due to similar equipment for both sections. This cost is considerably less than $132,575,000 as worked out by the CDWP committee with a combination of different non-compatible equipment of the two companies.
Keeping in view these facts, the tender committee of Pakistan Railways (i) accepted the offer of the lowest bidder, Bombardier, for Lodharan-Khanewal section at a cost of $30,877,989 (excluding ATP on-board and duplicate/excess items), instead of $37.393 million of Marubini; (ii) quoted cost (excluding ATP) was $32,897,128; and (iii) less duplicate/ excess item $2,019,139, totalling $30,877,989.
The committee also accepted the offer of the lowest bidder Bombardier for Khanewal-Shahdara Bagh section, including ATP on-board equipment and excluding duplicate/excess items, at a total cost of $98,618,793 as follows: Quoted cost (excluding ATP) $88,971,608; quoted cost of ATP on-board equipment $15,512,439 with less duplicate/excess $5,865,254, totalling total $98,618,793. Overall total cost was $129,496,782.
According to the Railways Ministry, the decisions have been taken in favour of the lowest bidder on merit, in accordance with the tender conditions. Due to adoption of one system on the entire section, there will be no risks regarding compatibility of two different systems, in addition to the advantages regarding training of staff, spares, inventory and subsequent maintenance.
These recommendations of Pakistan Railways tender committee have also been fully endorsed by the Executive Committee of the Railway Board and have been accepted by the competent authority (Secretary/Chairman Railways), and Letter of Intent has accordingly been issued to the successful bidder before expiry of the validity period of the bid offers.
The concerned officials and delegates of Marubeni/GE also had detailed discussions with the Secretary/Chairman Railways and his team, and were satisfied with the decisions of Railways. On a 'reservation' made by US Economic Counsellor in June, 2008, the Deputy Chairman, Planning Commission constituted a six-member committee, headed by former Secretary of Board of Investment, Ahmad Waqar. The committee submitted its report on July 24, 2008.
THE COMMITTEE CONCLUDED AS UNDER: "The committee unanimously recommends that the Pakistan Railways should submit the case to the Ecnec through the Planning Commission for ratification of the action taken by them". After the decision taken at the Ecnec meeting, Railways signed LoI with the successful bidder.
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