China is reluctant to sign a loan agreement for financing the $1.48billion Orange Line Metro Train project after the Punjab government further increased the cost of the mass transit scheme by one-tenth under the “contingencies” head. “The Chinese are willing to provide loans only on the basis of the initial project cost estimates of $1.48 billion, which is $147 million less than the Punjab government’s revised working,” said officials in the Ministry for Finance and Economic Affairs. “A Chinese delegation from Export-Import (EXIM) Bank is currently visiting Pakistan, but so far no progress has been achieved,” they added. Prime Minister Nawaz Sharif had picked the “Orange Line project” for showcasing the performance of the ruling party, just a day before the scheduled by-election in NA-122 Lahore. The 27.1km long metro train will start from Ali Town and end at Dera Gujran, PM Sharif told media persons last Saturday. After the Nandipur debacle and the government’s failed attempts, so far, at privatising loss-making entities, it desperately needs some good news.
The addition to the project’s cost comes as the Punjab government makes way for what it terms are certain contingencies. Orange Line is stipulated to be completed in another 27 months after the loan agreement is signed. The project’s consultants might have suggested that contingencies be accounted for, but our Chinese friends will need a lot more than just the “project cost revision” argument if the government wants them to increase the loan portfolio. It will need excellent negotiation skills to convince the financier to increase the amount. Otherwise, it will have to seriously consider cutting down costs if it wants to go ahead with the project. The question is why has the cost gone up by almost 10 per cent in a matter of a month. This remains a mystery. After the Engineering Procurement Construction contract was signed in April, Punjab got the project’s PC-1 approved from the Executive Committee of the National Economic Council at the higher cost in May. It is safe to say the PML-N will go all out in its attempts to convince the Chinese to increase the loan portfolio. Its term ends in mid-2018 and this doesn’t give it a lot of room or time to waste. Not exactly known for its negotiation skills, the PML-N will endure some difficulty in this endeavour. Meanwhile, the opposition will enjoy a field day as another one of the government’s development projects gets criticised, and there are bound to be arguments over whether the project was even needed.
pk.shafaqna.com
