'Railways track doubling project': government mulling giving Rs 13.6 billion contract to Chinese company

Federal Government is considering giving Rs 13.6 billion 'railways track doubling project' contract to a Chinese company without tender, based on negotiations between Khalil Ahmed, Special Presidential Envoy to China and Ambassador-at-Large with Chinese Minister for Railways, official sources told Business Recorder. The project will be considered by the Federal Cabinet on Wednesday (today) with Prime Minister Raja Pervez Asharaf in the chair.
The sources said Khalil Ahmad had held consultations with the China Railway Engineering Corporation (CREC), a state-owned entity, during his visits to Beijing According to sources, Ambassador-at-Large thereafter held meetings with the Minister for Railways, on March 29 and May 9, on the possibility of concluding a non-binding memorandum of understanding (MoU) between Pakistan Railway, and the China Railway Engineering Corporation for implementation of priority infrastructure projects through Chinese assistance on Build-Transfer basis.
A draft MoU to be signed by Pakistan Railways and China Overseas Engineering Group Company Limited (COVEC), a subsidiary of the CREC, has since been received from the Chinese side, which was partially modified by the Ministry of Railways. Both the draft MoUs have been vetted by the Law and Justice Division.
The MoU has the following salient features: (i) COVEC shall be invited to undertake the project relating to doubling of track between Shahdara and Lalamusa, a project approved by Ecnec at a cost of Rs 13.6 billion, on Build-Transfer basis; (ii) cost estimates for the project worked out by COVEC shall be subject to scrutiny of and validation by Pakistan Railways; (iii) subject to prior approval of the competent forum within the federal government, work could be awarded to COVEC on sole source basis, and (iv) COVEC would arrange funds from financial institutions in the People's Republic of China to implement the project.
The sources said repayment arrangements through a concessional loan for this liability would naturally have to be lined up by the Government of Pakistan before any initiative is taken by the Ministry of Railways. An advantage for Pakistan Railways would be that since the project is included in PSDP 2012-13 as a new scheme, an alternate financing mode will free up fiscal space for the Ministry of Railways to add new schemes relating to rolling stock to the PSDP, the sources added.
The Ministry of Railways sought comments from the concerned Ministries of the federal government, ie Cabinet Division, Finance Division, Planning & Development Division, Economic Affairs Division and Ministry of Foreign Affairs. However, no response has been received from the Cabinet Division and the Ministry of Foreign Affairs whereas the observations of the other Divisions have been partially received.
The Economic Affairs Division has supported the proposal, while the observations of the Finance Division and the Planning & Development Division are as yet rather pre-mature since the draft MoU is essentially exploratory in nature and is in any case non-binding; the sources quoted the Ministry of Railways as saying in the summary.