March 30, 2003	Sunday	Muharram 26, 1424

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ISLAMABAD, March 29: A consortium of the Pakistani contractors which was awarded Rs12 billion contract for completing the remaining work on the Peshawar-Islamabad Motorway project, has not been able to arrange the bank guarantee of Rs2 billion, resulting in further delay.

An official of Ministry of Communications told Dawn that the consortium of the builders, led by SKB with 30 per cent shares, has not been able to furnish bank guarantee as required under the agreement. The official, however, said that the failure of the contractor did not mean that the contract would be cancelled.

“The time can be extended but the problem seems that the contractor are not able to generate Rs2 billion bank guarantee.”

The site and the machinery which the government took over from the Turkish contractor has been handed over to the contractor but no substantial work has been initiated as the government would not make payments unless the contractor offered bank guarantee.

The officials in the ministry of Communication are now criticising Major-General Tariq Javed, the then chairman of the NHA, for making a wrong decision which cost the national exchequer billions of rupees.

The 156-kilometre-long road is a sad commentary on the working of the Pakistan’s government’s machinery. The project which was started in 1993 with the estimated cost of Rs16 billion has already gone beyond Rs40 billion, and half of the money is out of national exchequer, but there is no road.

The military government expelled the Turkish contractor from the site on May 7, 2001, on the ground that it had failed to complete two sections of M-1 on March 23, 2001, as was required under the agreement.

Officials associated with the project told Dawn that the Turkish company, at the time of expulsion, was working at great speed which was evident from the fact that it was, at average, presenting bills of Rs40 million every month.

The contractor had been promising that it would complete the two sections of Islamabad to Burhan and Peshawar to Rushaki by August 14, 2001, and the whole project by December 2002.

Now the government has awarded the contract to the local contractors at the “risk and cost” of Turkish contractor. If the government saved the money which it had promised at the time of expelling the contractor, it would go to the contractor and if it could not then the contractor would be required to pay.

The Turkish company which has gone back after “expulsion” from the site, has already approached the International Chambers for Settlement of Investment Disputes (ICSID) claiming US$400 million.

The matter has not yet been registered at ICSID but the moment it is registered, the government would have to arrange few million dollars to plead its case before the forum, which works under the umbrella of the World Bank, and there is no precedent that any country could avoid going to ICSID.

In one of the applications before a local court, the Turkish company had complained that it had been approached by a group of politically well-connected local contractors asking him to leave the project as they wanted to take over.

Those who are monitoring the project closely since 1993 when the Turkish company arrived in Pakistan for the first time, fear that it would end up in the hands of investigators and those associated with the project behind the bars.