ISLAMABAD: The Planning Commission raised a number of serious objections against a key project for Lahore worth over Rs165 billion, but could not secure any change in it before its approval, sources said.

The 27km Lahore Orange Line Metro Train is a brainchild of Chief Minister Shahbaz Sharif and the authorities signed its contract with Chinese contractors during the recent visit to Pakistan of Chinese President Xi Jinping even though its legal and procedural formalities had yet to be completed, the sources said.

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“We were used as a rubber stamp,” said an official of the Planning Commission.

He shared with Dawn the official record of the project and said that crucial documents, including its feasibility study, were not provided to the commission.

The official said the entire process — from submitting documents to the commission, taking the proposals to the Central Development Working Party for technical evaluation and getting them approved by the Executive Committee of the National Economic Council — was completed in less than 15 days.

As a result, the commission officials had no option but to put in writing that key documents required to complete the project preparation and approval procedure — like those pertaining to impact and outcomes, performance indicators, tangible outcomes or deliverables and outcome of stakeholder consultation — were not included in the PC-1 submitted to the commission.

There was no need to provide all details to the PC, says Punjab govt

“According to a decision of the National Economic Council, all projects costing more than Rs300 million should be supported by a proper feasibility study. The instant PC-1 is deficient of a proper fresh feasibility study report,” the Planning Commission report said.

It said the commission was told that the provincial government had already signed a contract with the Chinese contractor for implementation of the project on engineering, procurement and construction (EPC) basis before taking it to the federal government for clearance.

Standard procedure required that following approval of a development project by the competent authority, the sponsoring agency may start the tendering process. But in this case the process was turned upside down.

Even the framework agreement signed with the Chinese government was not shared with the commission.

The Planning Commission noted that the $1.63bn loan taken for the project from China was supposed to be repaid in 20 instalments in 20 years. But the interest and other charges to be paid worked out to more than 45 per cent of the loan amount.

When contacted, a Punjab government official said the project was not part of the federal Public Sector Development Programme and the entire amount would be repaid by the provincial government. Therefore, there was no need to provide all the details to the Planning Commission. The provincial government would itself take care of the concerns.

He said that since the foreign exchange component of the project was more than 25 per cent of its total cost, the federal government’s clearance was just a formality. Besides, the Economic Affairs Division was fully on board.

The total unit cost of the project was put at Rs6 billion per kilometre based on estimates of the Chinese contractor and the commission was kept in the dark regarding sustainability of the project including the annual recurring expenditure and income generation.

The commission is also not satisfied with the process of selection of the EPC contractor.

It said the Lahore Rapid Mass Transit System Network Report of the Punjab government put passenger flow for the Green Line facility for year 2025 at 660,000 against 495,000 passengers for the Orange Line but even then the latter was being preferred. This is important given that operation and maintenance cost and subsidy to be provided for operations was also not conveyed.

The Planning Commission said the source of funds for repayment of loan, and those required for components such as power system, electricity transmission line and civil works, was not shown in the project documents.

It was also not clear if the transmission system would be arranged by the provincial government or the National Transmission and Dispatch Company would have to foot the bill.

Also, given the fact that EPC contract was pre-signed and its cost was final the 4.16 per cent premium ($22.3m) for the project and contingencies of 10 per cent ($146m) were unreasonable. It proposed that contingency cost should not be more than 0.5 per cent of the civil works cost.

The commission also objected to lack of protective measures for electricity lines that are to pass through populated areas and could lead to power surge.

It said the geotechnical investigation of the project area was yet to be carried out without which the design and cost estimates of the foundations for the elevated and underground portions were questionable.

It added that even though the project would involve around 21 months of work, the PC-1 didn’t have any traffic diversion plan. The project would affect the local commuters and residents for a long time and a traffic diversion plan should have been included in the PC-1.

Published in Dawn, May 25th, 2015

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