ISLAMABAD, Sept 5: Differences between the ministries of finance and railways over procurement of railway equipment from China against suppliers credit have brought to a stand still progress on two of the five projects included in the package deal for which an MoU was signed between Pakistan’s ministry of railways and a Chinese company CMC in May 2000 in Beijing.
The five-project package had envisaged supply of 175 passenger coaches, 69 locomotives, 52000 tons rails, 1300 freight wagons and signalling (for Lahore-Rohri).
The total funding from China’s EXIM Bank for the five projects amounting to about $500 million carried an interest rate of about 5.25 per cent.
Concept clearance for all the five projects was obtained on October 21, 2000 and international tenders for the first two were floated in November 2000, for the third in January 2001 and the fourth and fifth in December 2000.
And interestingly it was after the evaluation of these tenders —in October 2001 for the first two, and in April 2001 for the third—that approval for these was obtained from CDWP and Ecnec.
Contracts for the first two were signed in November 2001 and for the third in April 2002.
Even more interesting is the fact that international tenders were floated for the remaining two and their evaluation completed (in September 2002 for the fourth and in April 2003 for the fifth) even before their PC1s were approved.
In a letter addressed to the minister of finance Shaukat Aziz dated July 28, 2003, the Railways Minister Ghous Bux Khan Maher pleaded with the former that ministry of finance “is yet to approve the terms of financing (for the fourth and fifth projects) and the Planning Division is to approve the PC-1’s which have been lying with them since long.”
In the same letter the railways minister had also tried to clarify the apprehensions expressed by the finance minister regarding procurement of railway equipment from various companies against supplier’s credit.
According to this letter two programmes (emergency repair plan and railways rehabilitation plan) containing a number of projects for revival of Pakistan railways were presented to the Federal Cabinet and the National Security Council in its joint session held on December 29, 1999 and approved for further action.
The railways minister’s letter further states that Chinese financing for these five projects was discussed during the 11th session of the joint committee on economic, trade, scientific and technical cooperation between the two governments. Minutes were signed at Beijing on May 16, 2000. Interest rates and repayment period for Chinese financing were also finalized during these meetings.
Another MoU was signed during the visit of prime minister to China on March 2003. This MoU has Chinese funding for continuing the five railway projects as well as a project for the revival of Karachi Circular Railways.
The minister in his letter said that during his own visit to China in February this year, he had a meeting with the EXIM Bank of China and raised the issue of lowering the interest rates with them. The EXIM Bank promised to refer the matter to their government.
Meanwhile, five locomotives already received against the 69 on order were pressed into service in the last week of August 2003 by the Pakistan railways. The preliminary reports of their performance as evaluated by the railways indicate that different nature of faults had come up which the Chinese engineers are reportedly resolving.
Pakistan has already spent substantial amounts that too borrowed from China on redesigning and revamping the British designed station platforms and rails to cater to the design and size of Chinese equipment.