PESHAWAR, Feb 4: The NWFP government may scrap a deal the City District Government (CDG) has reached with a private company for running CNG buses in the city, it is learnt.

A high-level meeting held on Jan 26 to decide the fate of the project had found out that the local government had not fulfilled legal formalities, and had recommended re-initiation of the entire proceedings, a senior official in the CDG told Dawn here on Monday.

The CDG, he said, had been directed to remove the deficiencies by revisiting the proceedings of the agreement it had held with a private company, Gul & Co, otherwise, the process would be reinitiated for selecting another suitable party through bidding.District Nazim Ghulam Ali had inaugurated the project in October last year and it was to be completed in three months.

But, the official said, no steps had been taken to implement the project, although the timeframe given for the purpose had expired. The provincial government put the process in abeyance last week.

When contacted, District Coordination Officer Abdur Rasheed Khan confirmed that the provincial government had reservations over the arrangements the CDG had finalised with the private company.

About the fate of the deal, he said: “We haven’t received any clear directives so far from the provincial government but it seems that the process will be reinitiated.”

According to him, the main idea behind starting CNG bus service was to control environmental pollution. But, he said, it was not clear whether the level of pollution in Peshawar could be reduced by launching the project. “To ascertain this, there should have been a proper survey of the provincial capital to verify the outcomes of running CNG buses on local environment,” he observed, adding this had not been done.

Under the agreement, the previous provincial government had agreed to provide loan for purchase of buses through the Bank of Khyber on 14 per cent mark-up. Of the total mark-up, the government was supposed to pay seven per cent amount as subsidy, which was later decreased to five per cent.

The finance department recently opposed the subsidy to be given from the provincial exchequer and insisted that it should be financed by the federal government, as it had done in Punjab. Consequently, caretaker Chief Minister Shamsul Mulk had ordered preparation of PC-I for the project to be sent to the federal government for securing funds.

However, to avoid further delay, the provincial government had decided to release the subsidy amount from its own exchequer, which would be adjusted once it received funds from the centre, sources said.

NWFP Chief Secretary Sahibzada Riaz Noor has also hinted at scrapping the deal.

He recently told journalists that the government was reinitiating the process of competitive biddings for running the CNG bus service in Peshawar.