Construction of 3 packages of Ring Road approved

[Salman]

LAHORE:
The Planning and Development Department on Friday approved the construction of three of the five packages of the Lahore Ring Road’s southern loop.

The decision was taken at the meeting of the steering committee of the P&D’s Public-Private Partnership Cell. The meeting was chaired by Finance Minister Mujtaba Shujaur Rehman.

It was decided that the Lahore Ring Road Authority would seek requests for proposals (RFP) from construction companies in two weeks.

With the revisions approved at the meeting, construction cost of the project would come down from Rs54 billion to Rs34 billion.

Financial plan

The meeting decided that the project would be undertaken in a build and transfer (BT) mode rather than the built, lease and transfer (BLT) mode approved earlier.

Under the BT mode, the ownership of the LRR southern loop would be transferred to the Lahore Ring Road Authority at the completion of its construction (in about two years).

The LRRA would now be responsible for the maintenance and operation (collection of toll tax).

This would save Rs29 billion earlier earmarked as a lump-sum payment to the construction company for maintenance.

Under the revised plan, the LRRA would pay back the construction cost in eight years at a 17-percent rate of interest.

Under the BLT mode, the ownership of the southern loop would have stayed with the construction company for 18 years after construction. The company would have leased the road to the government for toll tax collection.

Revised plan

The meeting also decided to construct service lanes on both sides of the road for only a five-kilometre stretch to bring down the construction cost from Rs54 billion to Rs35 billion.

Packages detail

Of the three packages of the southern loop approved on Friday, package 1 (9.35 kilometre) will connect the northern loop in Defence Housing Authority with Ferozpur Road; package 2 (13 km) will connect Ferozpur Road at Gajju Matta to Adda Plot; and package 3 (8km) will run from Adda Plot to Multan Road.

P&D PPP Cell Member Agha Waqar told The Express Tribune that revisions were undertaken to attract foreign investment.

Land acquisition

The P&D has so far released Rs9 billion to the LRRA for land acquisition.

An official who was present at the meeting says that the LRRA may need to pay another Rs12 billion for the purpose.

Published in The Express Tribune, April 25th, 2015.