Chinese and Pakistani flag on entrance to Karakoram Highway
| Photo Credit: Getty Images
Pakistan relaxed bidding rules to directly award a $2 billion contract to China for the construction of a strategically important road, according to a media report on Friday.
Finance Minister Muhammad Aurangzeb-led Economic Coordination Committee of the Cabinet on Thursday approved to invoke a special rule to exempt the requirement for the international competitive bidding to award a contract to Chinese firms for the construction of a section of the Karakoram Highway, The Express Tribune newspaper reported.
The Thakot-Raikot section of the highway is critical to keep China-Pakistan connected through the land route.
The committee considered a summary of the Ministry of Communications regarding the Execution of Framework Agreement between China and Pakistan on Realignment of KKH (Thakot-Raikot) under the China-Pakistan Economic Corridor (CPEC), according to a statement by the Ministry of Finance.
After detailed discussions and deliberations, and in order to comply with the codal requirements, the committee allowed the Ministry of Communications and National Highway Authority to proceed with provisions of the Framework Agreement in accordance with provisions of rule-5 of Public Procurement Rules, 2004 for procurement of construction of realignment of KKH (Thakot-Raikot Section 241 KM) project under CPEC (Phase-II), it added.
Pakistan had signed the framework agreement for the construction of Thakot-Raikot section of Karakoram Highway in June during the visit of Prime Minister Shehbaz Sharif to Beijing. China will give a $2 billion loan for the project.
The existing road portion will be submerged due to the construction of the Diamer-Basha, Dasu, Azad Pattan and Thakot dams along the road.
According to the framework agreement, the Chinese companies will be responsible for the engineering design, procurement and construction (EPC) and supervision work. The identification of the Chinese companies for the project will culminate in selection of one company or a consortium after due negotiations on all technical and financial considerations with the Pakistani institutions responsible for the project, according to the agreement.
China will provide a list of the recommended Chinese companies and Pakistan will select one of those for the construction work. Pakistan will use Chinese equipment for the construction of the project.
The Public Procurement Regulatory Authority (PPRA) law binds the government to give contracts through competitive bidding. However, the PPRA rule 5 states that whenever these rules are in conflict with an obligation or commitment of the federal government arising out of an international treaty or an agreement with a state, or any international financial institution the provisions of such international treaty or agreement shall prevail to the extent of such conflict.
The committee also approved to relax competitive process conditions for hiring of foreign consultants for the construction of Chakdara-Timergara road connecting Peshawar with Chitral.
The Export-Import Bank of South Korea has given a USD 49 million loan for the project but on the condition that the consultants will be hired as per its desire.
The Chairman ECC Senator Muhammad Aurangzeb directed that in future no foreign loans should be taken for those road projects, which cannot generate enough revenues to pay off these liabilities.
Pakistan’s external financing position remains thin and the government took a couple of incentives to ease pressure on the foreign exchange reserves, according to the paper.
