Karachi Port Trust (KPT) is "half-heartedly" negotiating with M/s China International Water & Electric (CWE), its would-be contractor for US $342.617 million Dredging and Reclamation Works (DRWs) project, for lowering the 48.03 percent foreign currency component (FCC) in its rates for the project.
It may be mentioned here that according to financial laws it is mandatory for the government institutions to prepare PC-I for any project involving FCC above 25 percent.
However, KPT, that terms itself to be a "self-financing" profitable organisation, seems less serious to convince the Chinese firm on its point of view, sources told Business Recorder on Sunday.
They said CWE has demanded FCC $152.429 million or 48.03 percent of the total cost ($342.617 million) of DRWs project, which is one of the three major parts of KPT's $1.6 billion Pakistan Deep Water Container Port (PDWCP) project.
CWE had come up with the lowest bid of Rs 20865424934 that includes Rs 10042944492 as local currency component and Rs 10822480442 as FCC which is to be calculated at the rate of Rs 60.90 per dollar, said the sources.
They said since KPT was perceiving itself to be a revenue generating self-sufficient semi-governmental institution, it was less wary of any such law, which provides for observing a lengthy documentary process, like preparing PC-I and getting it approved by the finance division.
That was why KPT was avoiding to submit its case to the ministry of finance, claimed the sources adding that even the so-called self-sufficiency, in terms of project-financing, may not authorise Karachi Port's operator to dodge the law.
Brigadier Syed Jamshed Zaidi (Retd.), General Manager Planning and Development Division of KPT also shrugged off a question whether KPT should have prepared PC-I for DRWs project.
The retired army officer said that since KPT was a revenue-generating (both in rupees and dollars) and self-financing organisation it did not need to go for such formalities (PC-I). He, however, said his side was negotiating with the bidder to review its demand for around 50 percent payment in foreign exchange (dollars).
Zaidi said even though dollar constituted a major part of KPT's earnings, yet "it would be beneficial for us if we get the FCC slashed."
It would be recalled that the Department Tender Committee (DTC) of KPT has also recommended to the KPT management that it should negotiate the possibility of lowering the percentage of FCC with the bidder.
Under the contract CWE would dredge a hard compacted sandy soil at Sector I and II by 32 million cubic meters (mcm), including 24 mcm to be dumped and 08 mcm to be reclaimed. KPT has a plan to undertake PDWCP project in three phases, including Marine Protection Works, Construction of Quay Wall and Dredging and Reclamation Works.