Infrastructure and Transport News

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Deep Water Container Port project: KPT Board expresses reservations about competence of bidder ​

KARACHI (September 12 2008): The reconstituted Board of Karachi Port Trust (KPT) has postponed the approval of awarding the Rs 19.288 billion capital dredging contract to, what sources said, a 'deficient' Chinese firm.

According to official sources in KPT, the Board, at its Wednesday's meeting, decided to delay the award of a very important contract to M/s China International Water & Electric (CWE), which, according to the sources, lacks in experience, equipment and personnel, until further discussion on the matter.

They said the Board was deliberating upon "some queries" regarding different aspects of CWE's offers, particularly the proposed rates (average) that stand at Rs 310 per cubic meter for dredging and Rs 187.50 and Rs 447 per cubic meter for the disposal of 24 million and reclamation of 8 million cubic meter dredged material, respectively.

The rates offered by M/s China Harbour Engineering Company (CHEC), the only competitor of CWE in bidding process, stand, however, far greater at Rs 660, Rs 281.50 and Rs 444.70 for the same three jobs, said the sources.

The KPT sources said CWE had offered the rates almost nearer to that of "engineer estimates" of Karachi Port's operator. They said the Board was likely to meet again on September 24 for final decision. It may be mentioned here that CWE had offered the lowest bid of Rs 19. 288 billion against CHEC's Rs 33.229 billion.

According to sources M/s Royal Hoskonigs of UK, KPT's consultant for the $1.6 billion Pakistan Deep Water Container Port (PDWCP) project that is to be undertaken in three different phases of Dredging and Reclamation Work, Marine Protection Works and Construction of Quay Wall, has already expressed its concerns over the ability of CWE to undertake the big project.

They said after evaluating technical bids of the two companies Hoskonigs had observed that CWE was lacking in experience, equipment and personnel, which are the three important areas for undertaking the dredging and reclamation project.

The sources said according to the consultant CWE had no international exposure in rock dredging in the open sea and it was required to hire personnel with proper experience in undertaking international dredging contracts along with a high capacity CSD and Backhoe dredger for rock dredging.

They said that the consultant had also rejected the proposed plan of CWE as "inadequate" saying that it might not ensure a timely dredging of the hard soil. Despite all such shortcomings, the sources said, Hoskonigs had recommended that KPT could consider award of work to CWE on the condition that the bidder needed to improve in the categories of experience, personnel and equipment.

Earlier, the sources said the Department Tender Committee (DTC) had also disappointedly advised KPT that either discharge the tender or award it to the lowest bidder, as no improvement was in sight if the tender was re-invited. DTC had also asked KPT that before awarding the contract it should get assurance from the Chinese firm that it would be responsible for employing any personnel or equipment if a need arises sometime during the work on the project.

Surprisingly enough, the committee had also recommended award of the contract to CWE on the condition that it would ensure uninterrupted supply of compatible equipment and manpower and review the 50 percent foreign currency component which stands at Rs 9.282 billion at the rate of Rs 60.90 per US dollar. A KPT official, however, told Business Recorder on Thursday that the project consultant had approved CWE for the award of contract without any reservations.

 

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Financing of $750 million Port Bridge project: JBIC awaiting green signal from PC ​

KARACHI (September 13 2008): Japan Bank for International Co-operation (JBIC), which is keen to finance the $750 million Port Bridge project of Karachi Port Trust (KPT), is awaiting clearance from the Planning Commission of Pakistan (PC).

According to official sources in KPT, Japan Bank has expressed its satisfaction over the feasibility report of the cable stay bridge, to be built over the navigational channel at Karachi Port, which would connect the proposed Pakistan Deep Water Container Port (PDWCP) to the Cargo Village at western backwaters and onwards to the Northern Bypass and Lyari Expressway.

"The bank has approved our feasibility study and is ready to finance the bridge, but it is waiting for the concept clearance from the Planning Commission," said an official in KPT's Planning and Development Division. When asked about the reason that caused delay in the execution of the project, the official said it was due to a fast changing political scenario and the resultant change of government in the country.

The official said after being cleared by PC the proposals would go to the Economic Affairs Division (EAD) for further deliberations. He, however, made it clear that KPT was determined to ensure a timely completion of the bridge which would be the first of its kind in Pakistan and would be completed within four years.

According to sources KPT has envisaged the bridge to be higher than the San Francisco Golden Gate Bridge with a 68-meter air draft, 300 meter span and approximately six kilometres causeway length. They said this would be for the first time that KPT, which is a profitable semi-government institution, has since long not opted for any loan or grant for port development works, but would now get foreign loan for this project.

KPT had always used its revenues to develop its infrastructure and had embarked upon development of various projects from its own resources, they said. They said the bridge would have two causeways, the first to connect Manora to the Clifton's Defence area and Sandspit Road, while the other would extend further to pass over western backwaters M/s Leonhardt Andra and Partners of Germany are the engineering consultants for the project.

 

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$160 million deal signed with China to purchase railway engines ​

MULTAN (September 13 2008): Chairman Railway, Kashif Murtaza has said that an agreement of 160 million dollar has been signed with China to purchase 75 railway engines which would be hand over to Pakistan very soon. He was talking to a press conference on Friday at a local hotel.

He said that very soon Multan Dry Port would be established with the co-operation of Railway Dry Port and private partners and Prime Minister Syed Yousaf Raza Gillani would lay down its foundation stone in between October 10 to 15.

He further said that very soon the railway hospital would be converted into a medical college with the aid of private partnership. To a question, chairman railway said that income would be earned from the railway stations by making them commercial with the help of private sector.

"Railway land would be made useful through proper planning and agriculture markets would be established on it," he said adding, so that the farmers could get more and more benefits from it. He said that Prime Minister has announced special measures for Multan and especially this dry port would be made functional within 6 to 8 months.

 

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Chinese company to carry out Multan airport extension work: agreement signed​

MULTAN (September 14 2008): Chinese firm Xinjialg-Beixin on Saturday signed an agreement with Civil Aviation Authority (CAA) for execution of Airport expansion project. Project Director Shen and Deputy Project Director Wang signed the agreement on behalf of Chinese firm, while Vikram S Sodha signed on behalf of CAA.

Briefing newsmen, Vikram and Airport Manager Shaukat Aslam told reporters that Rs 1.718 billion would be spent on the first phase of the project and work would begin from October 10, 2008, and it would include construction of new runway and apron.

They said that a cargo complex and airport of international standard would be constructed with an estimated cost of Rs 3.80 billion by June 2010. After that, Multan would be among the international airports and direct flights for Gulf states and cargo flights would be introduced.

 

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PIA to buy fuel-efficient aircraft ​

LAHORE (September 16 2008): Pakistan International Airlines (PIA) Managing Director Captain Ajaz Haroon has said that PIA will buy fuel-efficient passenger aircraft after disposing of existing aircraft that have outlived its operational life. He expressed these views while talking to newsmen at an iftar dinner hosted by PIA here on Monday.

Haroon said: "In order to come out of the financial crisis they have requested the government to take the ownership of its assets (especially its hotels in New York and Paris) that worth not less than US $1 billion." To a question, he said an amount of Rs 1.5 billion, which PIA owe to the Civil Aviation Authority, is disputed and would be settled soon.

 

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Government spending Rs 30 billion for improving infrastructure​

LAHORE (September 18 2008): Senior Minister, Raja Riaz Ahmad has said that the government is spending an amount of Rs 30 billion, during the current fiscal year, for improving socio-industrial infrastructure in Punjab. The purpose is to provide good living conditions to the ordinary people.

He was talking to various delegations of people and the political workers who called on him at his residence here on Wednesday. Raja Riaz informed that developmental resources are being utilised for improving necessary infrastructure in the province in a most transparent manner. Raja Riaz told that government is spending Rs 17.50 billion on roads development, Rs 15.23 billion for construction of public buildings and another some of Rs 6.76 billion on urban development. These expenditures are 38 percent greater than previous ADP's allocations.

The government is also spending Rs 1 billion on improving environment, he told. The government is also giving importance to improvement of less developed areas and some of Rs 7.50 billion has been earmarked for the composite development of southern Punjab, he informed.

 

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Total cargo handling registers 15 percent growth in July-August​

KARACHI (September 19 2008): The total cargo handling at Karachi Port registered a growth of 15 percent during the bimonthly period July-August 2008, vis-a-vis the handling taken place at port during the corresponding period last year.

This year KPT has handled 6,624,000 tons of cargo, which includes the handling of 2,280,000 tons of exports and 4,344,000 tons of imports. Handling in the corresponding period last year was 5,757,000 tons with exports at 1,463,000 tons and imports at 4,294,000 tons.

The dry bulk cargo exports handling during the July-August' 08 period ended on upbeat registering a massive growth of 92.04 percent in comparison from that of corresponding period's handling last year. The KPT handled 941,000 tons of dry bulk exports, which remained 490,000 tons last year during the period under consideration.

On the imports front, the total cargo handling has rose by 1.16 percent during the July-August period this year in comparison to that of corresponding period last year. The major imports handling was the liquid bulk cargo, which remained at 1,836,000 tons against the handling of 1,484,000 tons in the corresponding period of the preceding year.-PR

 

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British Airways suspends flights​

KARACHI (September 22 2008): British Airways has suspended its flights to Pakistan after a deadly bomb attack on Marriott hotel in Islamabad, a private TV channel reported on Sunday. Talking to another private channel, Director General Civil Aviation said that he had no information regarding the British Airways suspension of flights to Pakistan.

 

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Lowari tunnel project to be completed next year​

ISLAMABAD (September 25 2008): Over 70 per cent work of Lowari Tunnel project worth of Rs 8 billion on Nowshera-Dir-Chitral road (N-45) has been completed and the project would be completed next year. A source in National Highway Authority (NHA), Ministry of Communications told APP on Wednesday that over 75 per cent work of 9 kilometres each access roads on both sides of the tunnel has also been completed.

The 8.6 km-long rail tunnel will provide all-weather communication linkage to the Chitral valley, which remains cut off with other parts of the country in winter. It would also facilitate Pakistan's link with landlocked Central Asian state of Tajikistan via a narrow strip of Afghanistan. With its completion distance between Peshawar and Chitral would be reduced to five to six hours, he added.

Work on the project started in 2005 but it was formally inaugurated in July 2006. A Korean firm is constructing around 9 kilometres long, 7.5 metre wide and 7 metre high tunnel.

The source said the project would be completed in two phases. In the first phase tunnel would be constructed while in the second phase a railway track would be laid, he added. He said it would be the biggest freight tunnel in Asia, adding that the project is a joint venture between Korean firm SAMBU and some local firms.

It was more than 50 years back when first feasibility was taken up by the government in 1955 and the first construction was undertaken by Frontier Works Organisation (FWO) in 1975 during Zulfikar Ali Bhutto's regime. The FWO carried out tunnel operation up to 500 meters but the project was abandoned by the then ruler President Ziaul Haq citing financial constraints.

 

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Work on first IT Park at SSUET starts​

KARACHI (September 24 2008): Work has started on the setting up of Pakistan's first Information Technology Park to be constructed on 200 acres of land by Sir Syed University of Engineering and Technology (SSUET) in the Education City, where land has also been allotted to reputed institutions like Aga Khan University, ZABIST, Sindh Madressah, Shaukat Khanum Hospital etc.

The progress of the gigantic project was reviewed in detail at a meeting held under the chairmanship of SSUET Chancellor Z.A. Nizami here on Tuesday. Yahya Waliullah, a former Provincial Secretary IT and Planning and Development has been appointed as Project Director for IT Park project. The meeting was informed that feasibility of the project has been completed and now the costing involved was is being revised.

Chancellor Z.A. Nizami made it clear that he wanted a proper feasibility based on international standards, as the quality of entire work would depend on it. He directed that feasibility, inter alia, must envisage the resources for funding besides outlining technical collaboration with International Organisations involved in such projects.

He advised the Technical Committee members to establish direct contacts with relevant IT organisations in Manglore and Hyderabad. He called for preparation of PC-I of the project for submission to government and said that it was time for quick action. Nizami said that while preparing feasibility study, previous studies made for the project should also be taken into consideration.

SSSUET Chancellor told newsmen that development work on 200 acres of land for IT park in Education City was in full swing and Master Plan being prepared. He said that under-ground sweet water had been explored at a depth of 560 feet while tree plantation is being carried out at a fast pace. He informed that necessary allocation for the project for fiscal 2008-09 has been made in the budget.

 

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Gwadar airport faces delay due to slow land acquisition ​

Wednesday, October 01, 2008

ISLAMABAD: The New International Airport at Gwadar faces inordinate delay because of a massive slowdown in the process of acquiring land for the project, a senior government official told The News.

“The new airport that is to cost $200 to $250 million will be given international status and operate under the open sky policy. In the meantime, there are plans to improve facilities at the existing airport.” The official said unfortunately, this vital project has hit snags at the preliminary stage of land acquisition.

“Earlier, the cost of acquiring 4,300 acres of land for the project was approved at Rs1.05 billion, which has now swelled to Rs1.5 billion, a 50 per cent increase.”

Now the Planning Commission has revised upward the price of land after the government of Balochistan informed the centre that its cost has increased. The land acquisition process should have been completed much earlier as this important project was supposed to come on stream in 2009. Now execution of the project will be delayed by about six months. Owing to delay, the overrun cost of the project would also increase.

Now the government has released Rs1.5 billion to complete the acquisition of land for New International Airport at Gwadar. The Civil Aviation Authority, which is the executing agency, has been asked to look for a private party to initiate the construction process of the New International Port once the land acquisition process is over.

To a question the official said that the New International Airport will be constructed at Gurandari, 26 kilometers east of Gawadar city. This airport will provide speedy traveling to the investors coming in and going out of the port, which will be the hub of business activities in the region.

The official went on to say that Gwadar is located on the southwestern coast of Pakistan, close to the important Straits of Hormuz, through which more than 13 million bbd of oil passes. It is strategically located between three increasingly important regions of the world, the oil-rich Middle East, heavily populated South Asia and the economically emerging and resource-rich Central Asia.

 

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Govt to build shipyards in Karachi & Gwadar​

ISLAMABAD: The federal government has decided to build shipyards in Karachi and Gwadar to meet the growing needs of shipping lines.

A committee has been constituted to finalise the sites for building shipyards and submit its report before the policy board within two weeks for final approval.

Prime Minister Syed Yousuf Raza Gilani, while expressing government’s resolve for the development of shipbuilding industry in Pakistan, said that the setting up of two shipyards at Karachi and Gwadar would go a long way in catering to domestic as well as international needs.

The Prime Minister observed this while chairing a meeting to review the progress on the development of shipbuilding industry in the country here at the Prime Minister’s house this afternoon.

The Prime Minister constituted a committee under the chairmanship of the Minister for Ports and Shipping, Qamar Zaman Kaira, to finalise the sites for building shipyards at Karachi and Gwadar.

The Prime Minister emphasised upon the need to make Pakistan a leading shipbuilding country of the region thus contributing towards economic development and poverty alleviation.

While highlighting Pakistan’s unique geo-strategic location and trained manpower, the Prime Minister said, advantage needs to be leveraged to enter into shipbuilding industry in a big way through joint venture with reputable international shipyards. He said shipyards not only generate employment opportunities but also develop wide range of ancillary industries.

Earlier, MD Karachi Shipyards briefed the Prime Minister about the progress made on the development of shipbuilding. He also apprised the Prime Minister that two world-class shipyards on Joint Venture basis are proposed to be built at Gwadar and Port Qasim.

Minister for Ports and Shipping, Qamar Zaman Kaira, Chief of Naval Staff, Admiral M. Afzal Tahir, Secretary Defence Production, Secretary Ports and Shipping, Secretary Planning, Secretary BOI, MD Karachi Shipyard also attended the meeting.

 

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Government to meet infrastructural needs through PPPs: strategy adopted​

ISLAMABAD (October 01 2008): To provide relief and food security to the common man, the democratically elected government has adopted a new strategy to meet the country's infrastructural needs through public-private partnerships (PPPs).

Emphasising the importance of initiating new infrastructure projects with the active participation of the private sector, the Deputy Chairman of the Planning Commission, Salman Farooqui on Tuesday while chairing a meeting, asked the Infrastructure Project Development Facility (IPDF) and the Board of Investment (BOI) to take lead in developing such projects taking into account PPPs modalities.

Ghulam Murtaza Satti, Advisor IPDF, said that the government recognises the importance of improving and expanding infrastructure services for sustaining economic and social development of the country. Speedy development and execution of the infrastructure projects embodied in the country's medium-term development framework, he said. The government has chalked out a strategy which envisages to cover less than 50 percent infrastructural investment needs through public funds and to meet the remainder through PPP modalities.

Satti said that during his recent visit to the USA, President of Pakistan, Asif Ali Zardari chaired a conference of the Friends of Pakistan and the participating countries, while assessing Pakistan's needs, estimated an overall gap of 15 billion dollars in the public fund and committed to help Pakistan to come out of its economic hardships.

He said, many countries, in particular Abu Dhabi, America, China and Saudi Arabia as well as the European Union, have expressed their keenness to invest in the infrastructure development projects in Pakistan. There is, however, the need to promote specific projects to attract foreign direct investment, he added.

Public-Private-Partnership is an alternate method of procurement for the public sector in which the private sector capital and management is embodied to plan, implement and operate an infrastructure project.

The PPP mode has now become an integral component of Pakistan government's overall strategy for the provision of public services and public infrastructure across for sustaining economic and social growth, poverty reduction and job creation. The major benefit of PPP modalities is that the initial financial expenses for the project to be borne by the private party, thereby involving minimal public capital expenditure.

 

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Multan Dry Port ​

MULTAN (October 06 2008): Prime Minister Syed Yousuf Raza Gilani would lay the foundation stone of the Multan Dry Port near Sher Shah Bypass on October 15. Sources said that the railway administration has completed all the arrangements in this regard.

On the other hand, the railway sources told Business Recorder that no schedule has been announced by the railway ministry or railway headquarters regarding the arrangements of the ceremony of the foundation stone.

 

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Lahore Rapid Mass Transit System: Pakistan asked to complete PPP transaction ​

FAISALABAD (October 06 2008): Asian Development Bank has asked the Government to complete Public-Private Partnership (PPP) transaction for Private Sector Concession by October 2009, while ADB multi-tranche financing facility loan will be approved for public sector investment by December 2008 for Lahore Rapid Mass Transit System Project.

According to official sources, the Government understands that developing the Lahore RMTS with a PPP would provide an opportunity to improve the overall efficiency of the system. A PPP provides the Government with an opportunity to efficiently allocate risks between the Government and specialised private firms.

This means that risks will be controlled and influenced by the party that is best placed to control and influence these risks.

A PPP, however, would not make sense for the Government or private sector if either party were bearing risks that are better handled by the other. This means that a well-structured PPP is essential to achieve the objectives expected from a PPP.

ADB experts citing examples of key issues that need to be resolved as part of structuring a PPP transaction, include the following:

(i) Public versus private funding. The passenger fares that the Government plans to charge for the green line will not cover the full cost of building, operating, and maintaining the line. The Government will need to subsidise a portion of the capital costs. What portion would be funded by the Government, where would these funds come from, and how would these funds be paid are key issues to be resolved.

(ii) Ridership risk. While the Government should bear part of the ridership risk, the private operator should also have incentives to maximise ridership. Thus the private operator should bear a portion of the ridership risk. What portion and under what terms are key issues to be resolved.

Prior to consideration of ADB project financing, ADB should update project reports mentioned. Engagement of a transaction advisor is required to formulate financial structuring, undertake detailed due diligence, and package the Lahore RMTS to attract private capital and management.

The transaction advisor, in close consultation with ADB and the Government, will help prepare and launch a PPP transaction for the green line. ADB is willing, in principle, to partly finance the public-sector-financed portion of the Project under the multi-tranche financing facility modality.

ADB experts disclosed that the transaction advisory work will be carried out in three phases: preparation, implementation, and negotiation. During the preparation phase, the transaction advisor will carry out technical and legal due diligence, design the detailed structure and terms of the transaction, market the transaction with potential investors, and develop prequalification and bidding documents as well as the necessary contracts.

During implementation, the transaction advisor will assist the Government in obtaining any approvals and permits required, pre-qualifying potential investors, carrying out the bidding process, evaluating proposals, awarding the contract, and holding negotiations with lenders. During the negotiation, the transaction advisor will support the Government and winning bidder reach financial closure.

PHASE I, TRANSACTION PREPARATION:

The transaction preparatory work will include technical, legal, regulatory, financial, and safeguards due diligence in support of the proposed transaction. The transaction advisor will lead efforts to market the transaction, including tasks such as (i) preparation of initial marketing document, an information memorandum, and presentations; (ii) preparation of a list of investors that have the qualifications and experience to be the project counterpart; and (iii) consultations with potential investors and lenders to share information about the Lahore RMTS. The transaction advisor will also advise on progress made in preparing the transaction; and review feedback on the design of the transaction. International road shows may be required.

Phase II, Transaction Implementation

The transaction advisor will assist the Government in obtaining or issuing the necessary permits or approvals needed for implementing the transaction for the Project. These might include approval to (i) create and fund a subsidy account, (ii) issue a government guarantee, and (iii) launch prequalification and bidding process. The transaction advisor will assist the Government in (i) issuing the request for prequalification, responding to questions from interested parties, evaluating the expressions of interest, and selecting a short list of firms; (ii) issuing the request for proposals and responding to questions from bidders; and (iii) assessing the legal compliance of the proposals, evaluating the quality of the technical proposals and competitiveness of the financial proposals, and making an award decision.

PHASE III, NEGOTIATIONS:

Following the award of the contract to a bidder, financial closure for the transaction will require several months. During this period, the transaction advisor will assist the prospective lenders of the winning bidder in carrying out their credit analysis and, to the extent needed, assist the Government in negotiating with these lenders.

It may be recalled that the investment cost of the TA project, to finance the recruitment of transaction advisor, is estimated at $7.5 million equivalent, including foreign exchange costs of $6.0 million and local currency costs of $1.5 million equivalent. The TA will improve the urban rapid mass transportation network in Lahore. The outcome of the TA is a structured design for the Lahore RMTS Project feasible for ADB financing.