The National Highway Authority (NHA) has blamed Competition Commission of Pakistan (CCP) for misplaced criticism on the China-Pakistan Economic Corridor (CPEC) road projects, saying it may not only damage its credibility but it may also shatter the investors' confidence.
The CCP has conducted a study to assess competition issues in the road construction sector in Pakistan, especially in the wake of the CPEC, in which it has proposed remedies to foster competition and create a level playing field in the sector.
The Commission has asked the NHA to give the same treatment to local bidders as is extended to the Chinese firms in road construction. It argued that incentives such as import duty and income tax exemptions are lowering the cost of doing business for Chinese firms, discouraging local players and hurting Pakistan's economy.
Talking to Business Recorder, Spokesperson NHA Kashif Zaman said the CPEC was a game changer bearing immense importance for the future economy of Pakistan and such misplaced criticism may not only damage its credibility but also shatters the investors' confidence.
"Had the necessary input, either from the NHA or Economic Affairs Division (EAD) been obtained before finalizing the study, the ensuing confusion and misunderstanding could have easily been avoided," he added.
The NHA works under the Ministry of Communications, and being a government entity, it essentially follows rules and regulations laid down by PPRA and Pakistan Engineering Council (PEC) for all projects financed through the government of Pakistan.
However, for the projects implemented under foreign funding and government-to-government concessional loans, the bidding process is followed as per the requirements of the donor agencies, agreed in advance by the government of Pakistan at the time of loan signing agreements, Zaman added.
The multilateral development banks such as Asian Development Bank (ADB), World Bank (WB) and IDB, etc, drive their financial resources from various countries, and therefore only partner countries contractors can participate.
However, when concessional loans are signed by the government with a single country such as China, Korea or Japan, the donor agency of that country, most likely Export Import Banks (EXIM Banks) levy restricted bidding environment, specifically to contractors of that country.
He said that it is a standard international practice. In case of Peoples Republic of China, only state-owned companies, that too nominated by the government of China, can bid in the lender country. The same situation happened in CPEC projects, where Pakistani contractors could not participate. However, a large number of local contractors were hired by Chinese companies to sublet part of their works, which not only helped them out financially but the transfer of technology also occurred.
The highway projects under the CPEC are going ahead of their planned schedule and well within the approved budget and PC-1 costs, following strict quality control under the supervision of international experts.