No costly land to be pledged: Farkhand

ISLAMABAD – The Capital Development Authority has issued Letter of Intent (LoI) to firm M/s Oslo for Rs 6524.45 million project of replacement of conventional lights with light emitting diode (LED) lights across the federal capital.

However, as per dramatic arrangement, CDA would pledge it immovable property and Blue Area’s identified property with the lending institution – that would provide Rs 4.9 billion (75 per cent) of the total cost of the project.
Letter of Intent (LoI) is an interim agreement expressing the intention of the undersigned (in this case CDA) to enter into a formal agreement, or confirms that a certain course of action is going to be taken between the stakeholders.

Responding the letter, M/s Oslo, through a letter available with TheNation, has shown willingness to proceed further and stated that contract agreement is yet to be finalised. The firm further wrote to CDA that contract agreement would be finalized as per firm’s technical and financial bid submitted with the authority in November 2010, when the project was initiated.

However, as per submissions of the evaluation committee of CDA, that has evaluated the financial bid submitted by M/s Oslo in November 2010, the lending institution (in this case AEC illumianizone Italy) would have hypothecation charge over immovable property and Blue Area identified property.

While talking to TheNation Chairman CDA Engineer Farkhand Iqbal negated the impression, saying CDA was not going to pledge its costly land with the lending institution. He said now as Asian Development Bank has refused to fund 75 per cent of the project so CDA does not need any further approval from Planning Commission.

As per LoI, “CDA Board has decided on March 22, 2012 that Finance Division shall be approached for provision of Cash Development Loan (CDL) equivalent to 25 per cent (Rs 1.6 billion) of the project cost.”

To a question, that Transparency International Pakistan (TIP) has recently objected the aforementioned intention of CDA that authority would approach federal government for CDL and has termed it as a post tender change, Iqbal said, “Leave the objections of TIP, as everyone is aware of their hidden agenda behind this objection.”

He said Planning Commission has accorded concept clearance against the PC-I of the project and that now as per new arrangements CDA does not need any further approvals from Planning Commission.

Sources in CDA said firm M/s Oslo was in process of submission of all required documents for further processing of the contract agreement. “The contract in this regard would soon be inked with M/s Oslo,” Engineer Farkhand also confirmed.

Available with TheNation the LoI document states that Finance Wing of the authority has confirmed the cost assumption/bid of firm M/s Oslo Lighting backed by AEC Illumianizone, Italy, “the lowest and most responsive”. The PC-I document of the project – that was returned by the Planning Commission saying the unit price of LED light is very high and that economic/financial rate of return of the project is not favourable – shows the break-up of Rs 6524.45 million, total cost of the project, as Base Project Cost (Rs 5,685.07 million), Contingency (Rs 145.08 million), Interest during construction (Rs 182.52 million), Project Director Cost (Rs 8.6 million), departmental charges (Rs170.55 million) and escalation at the rate of 6.5 per cent and 13 per cent for 2nd and 3rd year (Rs332.58 million).

The CDA committee that had evaluated the finical bid of M/s Oslo has also objected the quotation of rates by the firm in foreign currency, saying the practice would result in payment of additional sum in shape of fluctuation in the exchange rate when CDA would payback the loan.

Sources in CDA further added that authority was going to sign the contract on April 6, however, the National Accountability Bureau (NAB) officials, who in a controversial move have recently taken a presentation regarding project from CDA, have asked them to put off the signing of contract for some time.

Source: http://www.nation.com.pk/pakistan-news-newspaper-daily-english-online/islamabad/09-Apr-2012/no-costly-land-to-be-pledged-farkhand