Metro bus completion: Delay to cost Punjab, centre Rs2.6 million per day

[Salman]

ISLAMABAD:
The Punjab and federal governments will have to suffer Rs2.6 million loss per day if the Rawalpindi-Islamabad Metro Bus Project is not completed by January 31.
On September 10 this year, the Punjab Metrobus Authority (PMA) signed an agreement with a Turkish firm commonly known as Platform Tourism, for operations, management and maintenance of the metro bus project.

It’s the same firm that is running the metro bus operations in Lahore.
A controversial clause, 6.1.21, has been incorporated in the agreement that provides for payment of a guaranteed amount to the firm from a cut-off date, February 1, 2015, if the project is not made functional by that date.
According to the agreement, a fleet of 68 buses will be initially introduced on the track.
PMA has guaranteed the Turkish firm that each bus will travel at least 191.78 kilometers per day while, Rs201.175 will be charged by the operator for every kilometre, as per the agreement.
A cut-off date of January 31 has been agreed by PMA and Platform Tourism for running buses on the metro track, the total length of which is 22.5 kilometres starting from Flashman Hotel in Saddar Rawalpindi to Pakistan Secretariat, Islamabad.
While according to the said clause, irrespective of delay or completion of the project, a guaranteed amount would be paid to the Turkish firm from February 1.
RDA is executing the twin cities’ metro bus project for almost Rs50 billion and if it is unable to handover the project by the extended deadline of January 31, PMA would have to pay Rs2.6 million every passing day to the Turkish firm.

Ozair Shah, general manager operations, PMA, while talking to The Express Tribune, said foreign firms usually make investments after taking loans from international banks and repayment of these loans is not linked with delays or early completion of the projects.
The firm would have to repay the amounts to the bank from a scheduled date.
Shah said if you unnecessarily delay beyond fixed deadlines then you have to pay and it is a logical and acceptable practice.
He said, meanwhile, that another clause had also been included to the agreement under the head of “liquidated damages”. It says, according to Shah, that if the operator fails to bring buses on the road until that day, then they would have to pay penalties to PMA.
He said similar clauses were also incorporated while executing the Lahore Metrobus Project.
He acknowledged the fact that construction of a corridor in the twin cities might face slight delays. However, he added that he could not comment further as he was not overseeing the construction work.
The construction work had already been delayed owing to the sit-ins in the federal capital by PTI and PAT. Several construction firms engaged in the project had sought extension in deadlines.
According to a press statement issued by RDA on Saturday, work on the project will be completed by January 31. However, several officials at RDA, CDA and PMA are of the view that the corridor may be completed by that date but it is ‘near impossible’ to make the buses operational on that route by the said date.
Published in The Express Tribune, November 17th, 2014.