Government fails to remove snags hitting KCR revival: project cost escalation feared
RECORDER REPORT
KARACHI (December 04, 2010) : The government seems to be least interested in revival of Karachi Circular Railway (KCR), as the important project to revive the KCR is hitting many snags and the government has not yet removed the same. The Economic Affairs Division, Islamabad has not yet resolved the issue of "re-lending" of funds for the $1.58 billion foreign funded KCR project.
Besides, the Sindh Government has not yet transferred the land needed to resettle the thousands of KCR project's affectees living along the railway lines, sources said. It is feared that if the several issues related to the foreign funded project were not resolved, which would ultimately delay the project, the cost of the project would increase.
According to the sources, if the re-lending issue was not solved timely and the fund was released under the available procedure, the project funds would face the drastic cut of 6.8 percent "risk rate" and almost 12 percent "interest rate" making the total deduction 18 percent from the approved fund.
The direct transfer of the amount to KUTC through the federal government, which would face an 18 percent cut, would make the project unviable, sources said, adding that the project which required to have a safe route for the transfer of fund from the foreign country while avoiding any reduction in terms of risk or interest rate.
During the last five months, the high ups of Economic Affairs Division and Planning Commission could not arrange high level meeting to settle outstanding issues related to the Japan-funded project. Besides, the provincial revenue department has not transferred the ownership of land to KUTC from Malir Development Authority (MDA) and other institutions to the KCR affected people.
However, the department, what the sources claimed, was facing land related issues after the flood, which has devastated/ washed away acres of agricultural/cultivable lands in the province. It is to be mentioned here that the KCR project, aimed at mitigating traffic problems in this metropolis, has to be funded by government of Japan through the Japan Bank of International Co-operation (JBIC). Tokyo has commissioned 100 percent funding for the project under "STEP Loan" at 0.2 percent mark-up rate for a 40-year payback time, including a 10-year grace period.
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