The federal government has decided to award the contract of new Gwadar International Airport (NGIA) to a public sector Chinese company, the China Harbour Engineering Company (CHEC), which will execute the project in the shortest possible time on fast track turnkey basis, official sources told Business Recorder here on Monday.
However, the Civil Aviation Authority (CAA) would be responsible for design review and supervision of the project, ensuring that the new airport is built as per best international practices, sources said.
The airport, which is expected to be a regional hub, would be developed primarily to cater to cargo market, with an investment of $70 million. CAA had invited proposals for project management and design consultants in March. Several firms expressed interest in the project, including CHEC, which also offered to undertake the entire airport project on fast track turnkey basis.
The firm also submitted its proposal to President Pervez Musharraf before his visit to China in June, 2006. Sources said that Defence Ministry examined the Chinese offer and found it to be an attractive proposition. It was also observed by the government and CAA that Pakistan could benefit by the early completion of the project through turnkey/EPC methodology due to its low cost and financing offered by the Chinese firm, they added.
"CAA's analysis of the Chinese offer showed that if it were to undertake the project in the conventional way then it would take 36-42 months to complete it, whereas the completion time given by CHEC is 24 months," sources said.
Other benefits of the offer are that the company is already mobilised in Gwadar and is familiar with the working conditions there. The firm had completed a major reference project in Pakistan--the Gwadar Deep Water Port Phase-I--and has vast experience of undertaking several engineering-based projects including airports (China-Macao-Hang Kong).
With the completion of the project at much earlier date than planned, both CAA and government could benefit from early realisation of revenue. Defence Ministry is of the view that being a State enterprise, the firm is in an ideal position to arrange finances for the project on the same lines as was done in the case of Gwadar Deep Water Project Phase-I ie preferential buyers credit and grants/soft loans.
Sources said that the offer of CHEC has already been approved by CAA Board in its meeting on July 8. In order to move forward, CAA has proposed to enter into a Memorandum of Understanding (MoU) with CHEC. After its signing, the firm would undertake a feasibility study, inclusive of site investigation, necessary surveys, preliminary design, cost estimates etc and finally submit a technical and financial proposal to the CAA.
The CAA would then review the technical and financial proposal to ensure that the requirements of ICAO are satisfactorily met. Once the technical and financial offers are accepted by CAA, the government would be requested to enter into a formal agreement with the firm on price and terms and conditions of the financial offer, as the project is being funded through PSDP.
The Planning Commission has supported the proposal, but it advised MoD to obtain approval of the Prime Minster for awarding the project to the Chinese company. Sources said that the MoU is likely to be signed during the visit of the Chinese President in due course of time.