The Karachi Circular Railway (KCR) project, is likely to be approved by President Asif Ali Zardari shortly, is feared not to be implemented if it is approved without solving the issue of "re-lending" of around $1.58 billion by the Japanese government.
According to sources, Karachi Urban Transport Corporation (KUTC) has submitted a report about the long-awaited project to President. The president, who is recently in the city, is likely to approve the project with other three transport related projects, they said.
KUTC, they said, has demanded the approval to shift the "Exchange Risk Coverage of 6.8 percent to the corporation, which means the reduction of almost 18 percent from the approved fund of $1.58 billion. The direct transfer of the amount to KUTC through the federal government, which would face an 18 percent cut, making the project impracticable, sources said.
They said the procedure of releasing funds would face the drastic cut of 6.8 percent "risk rate" and almost 12 percent "interest rate" making the total deduction of over 18 percent.
Interestingly, there was an easy way to save huge amount as there would be no reduction of risk rate if the foreign fund was managed to be transferred to KUTC through Pakistan Railways (PR), they said. But, they said, the high-ups in the KUTC were reluctant to transfer the amount directly to the corporation. Sources claimed, a meeting was held on December 18 at Economic Affairs Division (EAD), Islamabad, which had suggested to use the safe route for the transfer of fund.
It was suggested in the meeting that funds would be released through the Ministry of Railways to KUTC, who on its Board of Directors the senior officials of PR, Government of Sindh and City District Government Karachi (CDGK), they said. But despite a lapse of over four months, the relevant authorities had not been able to resolve the issue. The sensitive issue, it is stated, was not addressed since the project was under going different studies during the last few years.
The fresh report to the president, sources claimed, was submitted by KUTC after resolving the dispute between Malir Development Authority and PR for clearing a location for the resettlement of thousands of effectees of KCR project. The project had already passed through different studies like Environmental Impact Assessment Study (EIAS), resettlement action plan etc under the aegis of Japan External Trade Organisation (JETRO).