ISLAMABAD, April 20: Pakistan Railways (PR) has signed a lease agreement with a joint venture of local and Malaysian companies to develop Lahore Golf Course Complex with a total investment of $25 million.
The 49-year lease agreement, extendible for another 49 years, over an area of 140-acres in Lahore’s heartland near New Gardens would yield around Rs6 billion to PR at the rate of around Rs120 million per year, official sources told Dawn.
President General Pervez Musharraf would perform the foundation stone laying ceremony of the complex during second week of May, these sources said. Maxcorp Development Bhd of Malaysia hold 51 per cent shareholding.
Husnain Corporation that has secured mega contracts of Peshawar-Islamabad (M-1) and Pindi Bhattian-Faisalabad (M-3) motorway projects as well as owns country’s largest textile mill Mohib Textile Mills, holds 41 per cent shares in the Golf Course JV followed by around 8 per cent of Unicon of architect Pervez Qureshi.
Initially, eight parties had expressed interest to secure the lease but only three of them were prequalified. These included Maxcorp-Husnain, Hashwani’s and an Australian company. The two companies lost interest during the bidding and Maxcorp- Husnain became the only contender.
Officials said that given the reputation of local partners, the Malaysian company has incorporated in the agreement that if they fail to perform, it would have the right to purchase their shares in the JV.
Under the agreement, the lessee shall pay a minimum rent of Rs4 per sq.yard to be paid in annual instalments in advance on every anniversary including as escalation of 15 per cent after every three years.
The lessee shall also pay 10 per cent of its gross receipts of the minimum guaranteed feed whichever is greater on total revenue receipts net of taxes as royalty with the exception of charity events, food and beverages earnings.
The lessee shall pay 10 per cent royalty per annum plus a minimum guaranteed fee of Rs700,000 on gold course membership fee besides 10 per cent of monthly subscription. It will also pay Rs500,000 minimum guaranteed fee plus 10 per cent of royalty on revenue received from sports and recreational facilities.
In addition, the Railways would also get another Rs500,000 minimum guaranteed fee plus 10 per cent of revenue from the sale of merchandise and products at the golf course. All these payments would start when the Joint Venture commenced operations and earned revenue.
The JV would within 120 days submit certified statements of gross receipts with the details of separate activities along with payments of an amount equal to the royalty after deducting the minimum fee.
Gross receipts shall include only the revenue received by the lessee for calender year irrespective of when sale occurred. In case of instalments, the payments to PR would be made likewise. The JV would also submit a performance guarantee of Rs10 million for phase one.
An amount of Rs100,000 per day upto a maximum of Rs10 million shall be imposed by the PR for each day of delay as liquidity damages from the completion period for which no extension would be granted. This would be deducted from the performance guarantee.
The JV would pay $500,000 as commencement fee at the start of construction, two equal instalments of Rs15,000,000 (Rs15 million) on August 1, 2002, and 2003 and Rs12,857,143 (around Rs13 million) on every August 1 of each year between 2004-2011.
Phased development would be in three phases. The 18-hole golf course of which nine would be ready by December this year. The whole project is to be completed in three years.
Upon the completion of Phase-1, the balance amount of performance guarantee would be returnable to the JV. The JV would ensure neighbourhood rights and pay all utilities throughout the period.
The PR shall recognise and give effect to the occupants by sub-lessee’s, licensees, franchises of the lessee during the lease term and would ensure that access to the property is not closed temporarily or permanently.
For dispute settlement, the arbitration would be held in Lahore under the Pakistani laws.
Facilities under the phase-1 would include main club house building, snooker room, Golfer’s terrace, male and female changing rooms, restaurants, library and other supporting facilities. Sports centre would include driving range and swimming pools, tennis and squash courts, gym, health centre, cards room and a car park.
Second phase would include a five-star hotel while third phase would include facilities like condominiums, apartments and offices. The club house, golf course and all other buildings to be built would not require building approvals from Lahore Municipal Corporation or Lahore Development Authority. The PR shall also facilitate all the necessary government permits, licences and approvals.
Interestingly, the JV shall be entitled at any time to amend or modify any part of the work as may be deemed necessary. Before the lease, PR has been earning Rs12 per yard annual lease rental fee but was spending from its own kitty for utilities etc.
