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NHA needs drastic surgery

From Shamim Ahmed Rizvi, Islamabad
May 08 - 21, 2000

As was feared in certain circles, the ambitious motorway projects of the previous government appear to have run into disarray. Not only the annual budget of the National Highway Authority (NHA) is reported to have been cut by Rs. 3 billion by the present government, no policy decision from the present regime has yet been announced as to whether or not the motorway projects already approved by the previous government would be implemented. The chairman of the NHA, has not yet sought fresh advice from the federal ministry concerned on the issue of completion of the on-going projects, namely, the Peshawar-Islamabad Motorway known as M-I and Faisalabad-Pindi Bhattian Motorway described as M-3.

Even after 15 months of its being in service the toll collection from Islamabad-Lahore Motorway is not enough to meet its maintenance cost. As a result NHA is defaulting on payment to Daewood. Meanwhile, the NHA is reported to have reduced the Peshawar-Islamabad motorway from six-lanes to four lanes. It is not clear whether this change, apparently designed to reduce the cost by about 30 per cent, has been effected under instructions from the new government or the NHA itself has decided to bring about this change so far as the construction of Faisalabad-Pindi Bhattian Motorway (M-3) is concerned, it has come to a halt presumably due to discontinuation of the flow of funds/payments to the contractors who have reportedly started recovering toll tax from the vehicles plying on the service roads of this project. At the same time, the costlier and sophisticated road construction machinery supplied by the NHA is reported to have been put into use by the contractors in their other projects. The Karachi-Hyderabad Motorway (M-9) approved by the previous government but not yet launched, has rightly been on shelve in view of the resource constraints faced by the present government.

The Turkish firm Bayinder stopped work on 154KM motorway project almost 4 months back and reportedly left the country without any notice. Bayinders was paid Rs. 2.5 billion in Pak currency and $ 100 million as mobilisation advance. Bayinder was contractually bound to arrange 320 million us dollars as loan from abroad on terms acceptable to government of Pakistan. The NHA sources revealed that Bayinder backed out from the foreign loan clause on the ground that foreign banks were not ready to lend because of Pakistan's poor credit rating after nuclear test. When pressed hard Bayinder left the work and as a result over Rs. 1 billion of about dozen local contractors working for Bayinder has been stuck up. Bayinder has no forwarded three conditions to resume its activities, sources said. Conditions are; funding arrangements, extension in completion period from May 2001 to December 2002 and rescheduling of mobilisation advance repayment from actual Rs.100 million per month to 30 per cent of the total billed amount to the NHA. The sources said these conditions were not acceptable to the NHA. NHA is now considering to take legal action against Bayinder. From these reports it is more then established that the National Highway Authority is in a complete mess.

This correspondent sent a list of questions to Chairman NHA on 1.3.2000 with the request to grant an interview any time convenient to him during the week. Despite over dozen calls to Chairman's office and his media advisor (who was also provided a copy of questionnaire) during the next five weeks I did not receive any reply. On 6.4.2000, I wrote a letter to the Secretary Communication asking answers to the same question. The letter which was personally delivered to Secretary Communication was marked by him to his joint Secretary Mr. Ashraf Hyat vide Secretary Office diary No 2512 dated 6.4.2000. Having experience of NHA I personally followed the movement of this letter. Mr. Ashraf marked it to Director Road who faxed it to NHA. For three weeks I visited the Ministry for over a dozen time and always found every body in the meetings. It was on May 2 that I could get hold of the Secretary for a few minuter who deputed his staff officer to arrange repleties to my questions. The gentleman, again faxed the questions to the media advisor of the Chairman NHA from whom fortunately I received the replies on May 6,2000.

The replies are so sketcy that it leads to many other question. For that neither Secretary Communication is available nor the Chairman NHA nor I have got the patience. The question and their replies are reproduced below. I am now more convinced that the NHA is in a complete mess and needs a drastic surgery. I am sure my reader will also reach the same conclusion.

The NHA as well as Secretary Communication have avoided personal interview to save themselves from the embarrassment of the supplementary question which arise from their sketchy replies.

Any how the question asked and replies received are reproduced with some observation where necessary.

Question: What is the latest position of MI. Has Bayindir abandoned the project. If so why? What are the new arrangements?

Answer: The Islamabad-Peshawar Motorway (M-I) project has not been abandoned. The Contractor M/S Bayindir of Turkey has requested for extension of time which is under consideration.

PAGE (This is factually incorrect Bayinder has not requested for extension only. They also want backing out of contractual obligation of arranging the loan of 320 million US dollars).

Question: Has the number of lanes reduced to 4 from 6? If so what is the estimated reduction in cost and how it compares with the cost of 6 lanes?

Answer: Yes, the number of lanes has been reduced from six lane motorway to four lane Expressway. The overall saving in cost due to reduction in number of lanes is around Rs. 2.5 billion.

Page (six lanes were to cost Rs. 16.8 billion. Lanes have been reduced to 4 — reduction of 33% in the original work at a saving of Rs. 2.5 billion which comes to about 13 per cent, can it be justified?

Question: According to the revised arrangement made by Nawaz Sharif government in 1998 the project was to be completed by early 2001. What is the likelihood now?

Answer: M-I Project will be completed by 2002.

Page (The work is totally stopped on M-I, litigation may take years. How NHA can claim that project will be completed by 2002?).

Question: What is the position of M-3? Is the project progressing as scheduled? When it is likely to be completed?

Answer: The government of Pakistan has approved the Pindi Bhattian- Faisalabad Motorway (M.3). In this regard Ministry of Finance has agreed to the revised comforts to be given to the Concessionaire on the recommendation of Ministry of Communications. The project will be completed in 18 months.

Page (The government of Pakistan had approved the project in 1998. From which date the period of 18 months for completion of the project is to be counted?).

Question: Who is maintaining M-2 those days and at what cost.

Answer: M/S FWO are operating and managing the M-2. The cost is being borne out of the toll revenues. Page (What is cost of maintenance being charged by FWO? The reports are that they are changing slightly more than the toll tax collected. Expenses on motorway police are extra.

Question: What was the investment of Daewoo in M-2. How it is being repaid and at what interest?. How much has so far been paid and what is the amount still to repaid.

Answer:  M/s Daewoo investment in M-2 is 654 million dollar in term of loan to government of Pakistan. The loan has to be repaid on an interest of libor+1%. One installment of 52 million dollar has been repaid, Page (How many installments are in default. From where 52 million dollar have been paid? Certainly not from the toll tax).

Question: What was the original estimate of 6 lanes and how much has already been spent on the project?. What were the financial arrangement with Bayindir?. What is the position now?.

Answer: Original estimate for six lane (M-1) is Rs. 16.8 billion. Under the contract M/s Bayindir has to arrange 50% of the project as a loan to GOP.

Question: Was it correctly reported that M-3 is absolutely on BOT basis with no share of GOP in expenses?. After how many years the transfer will take place?.

Answer: M-3 is not absolutely BOT project. The share of government is 30%. The concession period is 25 years.

Question: What is the annual income from toll tax on M-2.

Answer: Annual income from toll tax on M-2 ranges from Rs. 380 million to Rs. 400 million.

Question: What was the cost of M-2?. How much so far been recovered through toll tax (after meeting the maintenance cost)?. How long it would take to recover the total cost through this method?.

Answer: The cost of M-2 is Rs. 35 billion. Till today about 1100 million rupees have been recovered in term of toll collection.

Question: What is latest position of M-9 (Karachi Hyderabad)?. Has the project been shelved as rumoured?

Answer: The Karachi-Hyderabad Motorway (M.9) has not been shelved. The govt. of Pakistan has reduced the project scope from six lane Motorway to four lane Expressway.

Question: How the work on dualization of GT Road is going on?. Name the Sectors where.

a) dualization has been completed

b) is in progress?

c) is still to be done

d) what is the budget allocation in the current financial year for this work?.

 

Name of Project

Contract Cost Rs. Million

Expected Completion

Progress

Hala-Sakrand-Moro (114 Km)

1,472

June-2001

41%

Moro-Kotri Kabir, GOP-1, 78Km

1,505

Sept-2000

73%

Kotri Kabir - Baberlo, GOP-II, 73.4 Km

1,883

Dec-2000

52%

Baberlo - Ghotki GOP-III, 58.6 Km

1,538

June-2000

97%

Ghotki - Ubauro, GOP-IV, 62 Km

1,456

June-2000

92%

Ubauro - R.Y. Khan, 91 Km

1,495

Dec-2000

55%

Rahim Yar Khan - Bhawalpur, 167 Km

4,000

June-2003

1%

Bhawalpur-Multan, 77 Km + 17 Km
Lodhran Bypass

1,520

Completed except Lodhran Bypass
(Dec-2000)

100%

Multan - Mianchannu, 116 Km

2,330

Completed execpt Khanewal O/H Bridge
(Mar-2001)

100%

Lahore - Okara Section - 1,67 Km

1,288

June-2000

95%

Lahore - Okara, Section-II, 77 Km

1,448

June-2000

95%

Kharian - Rawalpindi, 152 Km

4,229

Dec-2000

82%

Chablat - Nowshera (62 Km)

1,795

Dec-2000

49%

Question: The budget of NHA has reportaedly been alashed by 3 billion (from Rs. 19 to 16 billion) in current year. How it is going to effect the ongoiing projects?

Name of Project Cost Expenditure
By 30th June
Adiusted Allocation

.

.

.

. .

1999

(99-2000)

2000-01

2001-02

2000-03

ACW N-5

30,155

17,304

5,608

3,455

2,253

1,450

ECW N-5

9,000

-

-

1,500

3,000

3,000

Aided Projects Other on-going

38,544

28,617

1,113

950

550

100

Projects on HNs

11,818

4,594

1,597

1,712

1,931

1,580

MISC. Projects Pakistan

8,693

2,543

1,683

1,787

1,343

800

Expressway Project

99,941

44,152

3,329

10,513

5,230

1,700

New Projects

50,675

-

-

4,200

6,183

8,400

Total

. .

13,330

24,207

20,490

17,030