Pakistan Railways asked to justify controversial deals
Aftab Maken
Saturday, March 31, 2012
ISLAMABAD: The National Bank of Pakistan (NBP) has asked Pakistan Railways (PR) to justify its deal with National Logistics Cell (NLC) for repairing 30 locomotives at Rs500 million while the Banks Balancing, Modernisation and Replacement (BMR) for 100 locomotives is worth Rs6.1 billion.
The News has reliably learnt that PR has two separate deals to repair 130 units from its aging fleet of locomotives. In the first deal, NLC has been asked to repair 30 locomotives at the cost of Rs500 million. After the repair, half of the repaired locomotives would be used by NLC and PR for freight purposes only.
In the second deal, NBP is to arrange a financing facility of Rs6.1 billion for the BMR of 100 locomotives
An average per unit locomotive cost by NLC has been worked out at around Rs16.66 million while the per unit locomotive cost under the NBP facility would be Rs61 million- close to nearly 400 percent of the NLC one.
An official correspondence by the Bank to the PR and its attached department, Pakistan Railway Advisory & Consultancy Services Limited (PRACS) read: The NBP would like to have clarification from you [PR] regarding the difference in the cost of repair of 30 locomotives under the agreement with NLC which will be approximately PKR 500 million and the cost of repairing 100 locomotives for PKR 6,100 million being arranged by NBP as this seems to be a great anomaly.
In a telephonic conversation from Lahore, explaining the rationale behind the low cost of repairing in the NLC deal, Acting General Manager of Pakistan Railways, Junaid Qureshi told this correspondent that the 30 locomotives being repaired by NLC are relatively less damaged and are in operational condition.
However, he said, the 100 locomotives being repaired with NBPs financing are dead locomotives [non-operational] and that is the main reason for high cost of repairing under NBPs arranged facility.
The repairing and BMR of the aging locomotives of the PR were placed when the procurement of 150 locomotives through international tendering had not been successful and intending parties had gone into litigation for the supply of tender, he added.
Upon further questioning, Qureshi said, It is the assessment of Pakistan Railways that not more than 96 locomotives can be repaired from the facility arranged by the NBP, however, he further cautioned that- in his opinion- the exact number of repaired locomotives under NBPs facility would range between 75 to 85.
PRACS balance sheet for the financial year ended June 2011 revealed a net loss of Rs10.484 million. The balance sheet further revealed that PRACS has total liabilities of Rs368 million against the total assets of Rs681 million, and has only Rs293 million as working capital for the company to operate on.
It was further learnt that the Government of Pakistan as a guarantor will help PRACS, through the NBP, to raise capital through issuance of redeemable capital up to an aggregate amount of Rs6,100,000,000/- (Rupees six billion one hundred million only) in three tranches and in the form of Term Finance Certificates (TFC) of the face value of Rs5,000.
According to the guarantee draft prepared for the deal between PR and NBP, the obligations of the guarantor under this guarantee shall be absolute and unconditional and shall remain in full force and effect until all the agreement, terms and conditions of the Facility Agreement have been completely discharged to the entire satisfaction of NBP.
The NBP in its written reply to the queries of The News said, Any facility being considered by NBP vis-a-vis Pakistan Railways is being considered under the government of Pakistan guarantee; with the government of Pakistan guaranteeing the principal amount as well as any mark-up to be paid by Pakistan Railways.
It further elaborated that the government of Pakistan has approved the requirement of Pakistan Railways for the Rs6.1 billion for which it has consented to extend its guarantee through Ministry of Finance
The NBP does not have access to the specifics of the agreement between NLC and Pakistan Railways or exactly the nature of repairs required by the locomotives that are part of the NLC/Pakistan Railways transaction and as such can not comment on it, said the reply of the NBP.
Pakistan Railways asked to justify controversial deals - thenews.com.pk
Aftab Maken
Saturday, March 31, 2012
ISLAMABAD: The National Bank of Pakistan (NBP) has asked Pakistan Railways (PR) to justify its deal with National Logistics Cell (NLC) for repairing 30 locomotives at Rs500 million while the Banks Balancing, Modernisation and Replacement (BMR) for 100 locomotives is worth Rs6.1 billion.
The News has reliably learnt that PR has two separate deals to repair 130 units from its aging fleet of locomotives. In the first deal, NLC has been asked to repair 30 locomotives at the cost of Rs500 million. After the repair, half of the repaired locomotives would be used by NLC and PR for freight purposes only.
In the second deal, NBP is to arrange a financing facility of Rs6.1 billion for the BMR of 100 locomotives
An average per unit locomotive cost by NLC has been worked out at around Rs16.66 million while the per unit locomotive cost under the NBP facility would be Rs61 million- close to nearly 400 percent of the NLC one.
An official correspondence by the Bank to the PR and its attached department, Pakistan Railway Advisory & Consultancy Services Limited (PRACS) read: The NBP would like to have clarification from you [PR] regarding the difference in the cost of repair of 30 locomotives under the agreement with NLC which will be approximately PKR 500 million and the cost of repairing 100 locomotives for PKR 6,100 million being arranged by NBP as this seems to be a great anomaly.
In a telephonic conversation from Lahore, explaining the rationale behind the low cost of repairing in the NLC deal, Acting General Manager of Pakistan Railways, Junaid Qureshi told this correspondent that the 30 locomotives being repaired by NLC are relatively less damaged and are in operational condition.
However, he said, the 100 locomotives being repaired with NBPs financing are dead locomotives [non-operational] and that is the main reason for high cost of repairing under NBPs arranged facility.
The repairing and BMR of the aging locomotives of the PR were placed when the procurement of 150 locomotives through international tendering had not been successful and intending parties had gone into litigation for the supply of tender, he added.
Upon further questioning, Qureshi said, It is the assessment of Pakistan Railways that not more than 96 locomotives can be repaired from the facility arranged by the NBP, however, he further cautioned that- in his opinion- the exact number of repaired locomotives under NBPs facility would range between 75 to 85.
PRACS balance sheet for the financial year ended June 2011 revealed a net loss of Rs10.484 million. The balance sheet further revealed that PRACS has total liabilities of Rs368 million against the total assets of Rs681 million, and has only Rs293 million as working capital for the company to operate on.
It was further learnt that the Government of Pakistan as a guarantor will help PRACS, through the NBP, to raise capital through issuance of redeemable capital up to an aggregate amount of Rs6,100,000,000/- (Rupees six billion one hundred million only) in three tranches and in the form of Term Finance Certificates (TFC) of the face value of Rs5,000.
According to the guarantee draft prepared for the deal between PR and NBP, the obligations of the guarantor under this guarantee shall be absolute and unconditional and shall remain in full force and effect until all the agreement, terms and conditions of the Facility Agreement have been completely discharged to the entire satisfaction of NBP.
The NBP in its written reply to the queries of The News said, Any facility being considered by NBP vis-a-vis Pakistan Railways is being considered under the government of Pakistan guarantee; with the government of Pakistan guaranteeing the principal amount as well as any mark-up to be paid by Pakistan Railways.
It further elaborated that the government of Pakistan has approved the requirement of Pakistan Railways for the Rs6.1 billion for which it has consented to extend its guarantee through Ministry of Finance
The NBP does not have access to the specifics of the agreement between NLC and Pakistan Railways or exactly the nature of repairs required by the locomotives that are part of the NLC/Pakistan Railways transaction and as such can not comment on it, said the reply of the NBP.
Pakistan Railways asked to justify controversial deals - thenews.com.pk
