The question is why has the cost gone up by almost 10 per cent in a matter of a month. This remains a mystery
A number of projects Pakistan has undertaken recently have seen their costs escalate to a point of no return. The latest project that seems to be going down this road is the much-trumpeted Orange Line Metro Train Project in Lahore, which, if and when completed, would be another feather in the cap of the PML-N leadership that already has the Metro Bus in its list of achievements. While development projects should be hailed — keeping politics and criticism for the sake of criticism aside — news that the Chinese are reluctant to sign the loan agreement after the Punjab government added $147 million to the estimated cost of $1.48 billion is not the kind of publicity that the Orange Line needs. 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.
Published in The Express Tribune, October 18th, 2015.
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