KP raises fresh concerns on corridor

on 17/07/2017

PESHAWAR: Khyber Pakhtunkhwa government has conveyed concerns to  federal government about several aspects missing from the draft of long term plan (LTP) of China Pakistan Economic Corridor (CPEC) project, including western and northern routes, Sino-Pak trade imbalance and water resource management. LTP 2017 is a national plan approved by both Chinese and Pak governments and would remain effective till 2030. Its’ short and medium term aspects would be operative until 2020 and 2025, respectively. Officials said LTP draft was shared with KP government seeking comments and suggestion on plan’s various aspects. However, the government was given only 5 days to review the plan and offer comments. Time allowed for envisioning holistically and offering comprehensive comments on LTP for such a significant ‘game changer’ with far reaching effects is extremely limited. A federal government official said this while high lighting concerns over plan’s missing links. KP government shared its 11 page interim response with federal government. The response, offers critique of various parts of 30 page LTP. In its LTP appraisal, KP government pointed out that plan’s connectivity chapter was silent about western route being undertaken by federal government and northern route (three passages), of which one passage had been accepted by CPEC joint coordination committee. Regarding second northern route, it noted that entire CPEC trade was based on a single passage (Haripur to Khunjerab), which passes through world’s most difficult terrain. `From a strategic point of view, it noted that a fully functional back-up route is needed from first Gilgit to Mardan, second from Bisham to Alupur and third from Besham to Mardan. Besides, it pointed out that the document also misses Indus Highway connectivity to Afghanistan and Central Asia through KP, besides failing to integrate FATA with rest of Pakistan. It noted that document only mentions Chinese key functional zones, while Pakistan’s key functional zones are not mentioned. LTP is a Pakistani document and needs to state its needs properly, it added. Chapter concerning industries and industrial parks, said Pakistan’s important economic zones, other than Gwadar Free Trade Area, need to be mentioned and failure to treat the subject properly may lead to miscarriage of development. In KP, promotion of Hattar, Rashakai and Dera Ismail Khan special economic zones would contribute to Pakistan`s economic growth. It also points out that LTP pays inadequate attention to mining sector, which is important for both KP and Balochistan. The document went on to note that the northern tourism belt centered around KP and GB. Development of northern routes is not mentioned in LTP, while in energy sector, development of oil and gas sectors also needed to be addressed. The document said trade imbalance between China and Pakistan needs mentioning in LTP. It proposed that under industrial collaboration, those industries need to be set up that aim at import substitution in Pakistan and on making Pakistan an export hub. It also suggested developing floriculture saying KP has immense potential for it and flower exports will have an excellent brand image of Pakistan. The document also asked for a 5 years plan for Pak-China economic cooperation, industry regulations, time for opening financial institutions, inclusion of dairy sector and dispute resolution mechanism to resolve commercial disputes with simple laws. KP government also proposed a second fiber optic cable route in north running from KP to Gwadar, to provide an alternative connectivity to Afghanistan, Iran and Central Asia. It said LTP needs to define core and radiation zones where parts of Punjab, KP, Baluchistan and GB are included as core zones and country’s areas f all under radiation zones.  It said the documents did not adequately foresee growth potential in KP’s urban economic centers and therefore, towns of Abbottabad, Nowshera and Mardan etc need to be mentioned as nodes. Being dead on CPEC route, these will see exponential growth, it added.

WB tribunal upholds TCC claim

on 17/07/2017

 Pakistan may face $11.5 b penality

An arbitration tribunal of  World Bank has ruled in favor of Tethyan Copper Company Pvt Ltd (TCC) in Reko Diq gold mine project case. As a consequence, Pakistan may face a penalty of $11.5 billion for not awarding the project to TCC. World Bank’s International Center for Settlement of Investment Disputes (ICSID) had earlier rejected Pakistan government’s application to dismiss TCC’s claims on grounds of corruption and malpractices by the latter. Both the federal and provincial governments submitted applications before ICSID and International Criminal Court (ICC) in The Hague during 2015-16, seeking admittance of new evidence showing TCC’s corrupt practices in Reko Diq affairs for illegal and undue gains. The move turned futile as the court ruled against Pakistan government for unlawful denial of the mining lease for Reko Diq to TCC which is a joint venture of Chile’s Antofagasta and Canada’s Barrick Gold Corporation. The TCC had initially filled the claim in 2012. Later in 2017, the company filed for compensatory damages amounting to $9.1 billion based on fair market value of its investments in the project till November 15, 2011. In addition, it also filed a claim of $2.3 billion as pre-award compound interest. Now, the government has to submit its reply to TCC’s damages claims. It merits mentioning that the PPP government had made an unsuccessful attempt to settle the dispute with TCC and, had also warned the Balochistan government of not paying pay damages in case of any adverse ruling from international tribunals. TCC held 75% shares while Balochistan had a 25% stake in the project. The company claims to have invested over $500 million in exploration, scoping and feasibility studies of the project. The total investment in the project was projected as $5 billion over a period of five years. TCC and Balochistan reached a deadlock in 2009 because of two major issues. One that Balochistan refused to take financial responsibility against its 25 percent stake. Two, the TCC was not in favor of the involvement of a Chinese company. A letter written by Pakistan’s Ambassador to Chile Burhanul Islam to then Petroleum Minister Naveed Qamar in September 2009 had advised against involving Metallurgical Corporation of China in the same mining site. In a feasibility report submitted to the Balochistan government, TCC projected a turnover of over $60 billion for the gold and copper project over a span of 56 years. This projection was based on a price of $2.2 per pound of copper and $925 per ounce of gold, in the year 2009. The mine has estimated reserves of 11.65 million tons of copper and 21.18 million ounces of gold.

PEC subcommittees declared unlawful

on 17/07/2017

GB dissolves all committees;Punjab Building Committee survives!

‘Of 800 members of 74 committees, 85 percent were outsiders’

The governing body (GB) of the Pakistan Engineering Council (PEC) has dissolved all subcommittees but one, formed allegedly in violation of the PEC Act and bylaws. The only committee which remains is Punjab Building Committee.

These committees were shaped by chairman PEC, Jawed Saleem Qureshi without due approval of the governing body, a number of the members of the body told Engineering Review.

The alleged unlawful formation of the committees had created deepening unease in numerous senior members of the council as they believed neither the PEC Act had been followed nor the governing body been taken into confidence.

The council is provided by the article 35 of the PEC Act to form one or more committees for carrying out special business. A senior engineer said although there was no specific number of committees mentioned in the PEC Act, it did not mean the law permitted formation of unlimited or a huge number of committees.

To the surprise of many, the number of subcommittees formed to proceed with special business of the council rose to the all-time high as 74—all formed without ratification of the governing body which solely holds, as per law, the mandate of formation, deletion, extension and abridgement of Committees.

Not only that but also the membership on such committees was so high in number that many engineers alleged it was a loss to public exchequer. An engineer claims the total number of the members of all committees was around 800. More ironical was the fact that, from this lot a high number of engineers on committees, only 15 percent were those who belonged to the governing body. The rest of the members making 85 percent of the total strength were outsiders who allegedly had been closer to the leadership.

Yet another senior engineer requesting anonymity also confirmed such a grave situation in the council. He however differed the ratio on the committees saying GB-related members and outsiders on the council might be 35:65.

Deterioration in the PEC is not a new phenomenon as the management committee—a body of senior engineers who are responsible to oversee the working of the secretariat so that the affairs of the council run as per law—allegedly kept mum and avoided bringing the issues to the notice of the governing body and thus failed to stop unlawful use of authority.

The Committees were formed illegally and the secretariat continued with such proceedings of formations, dissolutions, deletions and extensions of the committees without any lawful authority and the management committee failed to oblige its legitimate role to stop these illegalities at the first step, alleged a senior engineer.

The council is now replete with a question as to who is responsible for such a glaring violation of law which has put burden on council’s resources as well as on national exchequer.

The situation, yet another engineer told ER, has turned so messy that the management committee has not met for over 2 months. Many engineers ask about achievements of the council which is supposed to play a crucial role for development of engineers and engineering in the country. The transparency in appointments of 41 sub-registrars is being questioned amidst whispering as regards groupings on political basis in the council.

200 textile, leather units on verge of collapse

on 16/07/2017

FPCCI, trade bodies demand restoration of EDB

Trade bodies and the chambers, in a national conference held under the banner of FPCCI in Lahore, have demanded restoration of the Engineering Development Board (EDB). They also stressed upon immediate payment of refunds to the industry. Vice President SAARC Chamber Iftikhar Malik said that the number of research centers and laboratories should be increased while there should be strong linkage between industry and the academia. Research is very important for promotion of industries and same should be on industrial requirement. He said there is dire need of skilled manpower as CPEC projects are bringing many job opportunities in the country. He said the United Business Group (UBG) would never ever compromise on the interests of the business community and take their genuine grievances to higher levels. He said that the auto industry and agricultural sector were not showing proper growth. Pakistan’s auto market is considered among the smallest but it is fastest growing in South Asia, demanding the government should follow its own “Auto Policy 2016-21” and offer tax incentives to new automakers for establishing manufacturing plants in the country. He said that the EDB in past played a significant role for promotion of hardware engineering and he wondered why the government dissolved such important department. He demanded to restore the board as soon as possible. Patron-in-chief UBG and former Chief Executive of the Trade Development Authority Pakistan SM Muneer claimed a major chunk of industries especially textile and leather was suffering colossal financial losses and thus needed immediate oxygen otherwise industrial sector would collapse. He said nearly 200 textile and leather units were forced to shut down because of heavy taxation and absence of relief from the government. SM Muneer stressed upon an urgent need for introducing pro-poor, business friendly , export and growth oriented monetary policies to help strengthen national economy on sound footings besides restoring confidence of foreign and local investors. Manzoor-Ul-Haq Malik, Regional Chairman FPCCI, said the elected government should focus on issues of business sector otherwise they would lose their vote bank. He said government should make efforts to bring non-registered tax payers into tax net instead of squeezing already registered tax payers. Tax return system should be simplified. Help desk of Punjab Revenue Authority should be established at each Chamber of District. Discretionary powers given to the Federal Board of Revenue officials should be withdrawn. Business representative should be included as Board of Directors of all Government Institutions, PBIT, TDAP, FBR and NTC. He further stressed on enhancing industrialization, balancing trade, increasing exports. He added double taxation should be discouraged. He said direct taxes should be encouraged instead of indirect tax system. He said Pakistan was at 144th number of ease of doing business ranking of World Bank out of the list of 190 countries which is alarming.

Revival of Manchar Lake receives a blow

on 16/07/2017

 

P&D returns PC-I of NaiGaj Dam to W&P

The Ministry of Planning and Development has returned PC-I of the NaiGaj Dam to the Ministry of Water and Power, as the former wants a commitment from the Sindh government that it will finance environmental component of the project.

The step may affect efforts of reviving the Manchar Lake—the largest lake in Asia. Manchar is supposed to get fresh water supplies from the dam which is the only source of water for the lake. Ministry of planning has asked the ministry of W&P that before the processing of PC-I by CDWP it should provide written commitment from Sindh government for financing environmental component costing Rs5.80 billion.

The NaiGaj Dam project was initially approved by the ECNEC in 2012. Even after a lapse of five years, the CDWP has not revised the PC-I of the project. NaiGaj Dam is being constructed on Gaj River in district Dadu of Sindh with the total cost of Rs.46 billion. The 194-feet high dam will store 300,000 acre feet of water and irrigate 29,000 acres of the land. The project will create employment opportunities numbering around 6,500. The annual benefits of the project have been estimated over Rs3 billion.

Right Bank Outfall Drain (RBOD) is the major polluter of the lake. It is also one of the causes of quarrel between Sindh and center. This lake cannot be revived until salinities from RBOD are stopped. It is feared that if the RBOD project will not complete on time, the flora and fauna of Manchar Lake will completely be wiped out. However after an agreement reached between  Federal and Sindh governments on RBOD-II funding, it is hoped that the contamination of Manchar Lake will end.

The issue of fresh water supply to the Mancher Lake still persists as the water wing of the planning ministry has returned the PC-I of the NaiGaj project without the approval of the competent authority. Planning experts are of the view that Mancher Lake cannot be revived unless fresh water is supplied from NaiGaj Dam.  Supreme Court has already initiated suomoto proceedings on growing level of contamination in the Lake and deprivation of the livelihood of fishermen. The experts of the planning ministry are of the view that degrading quality of water of Mancher is at an alarming stage and if fresh water is not supplied, it will be a great dilemma for this national asset.

The PC-I of the project was approved by the ECNEC in August 2012 at a rationalized cost of Rs26.24 billion after removing some components of the project on which the Sindh government raised its objections. As it is believed that the environmental requirement of the project could not be addressed until fresh supplies from NaiGaj is not ensured. The implementation of deleted components will increase the project cost by 13 percent (Rs5.80 billion) to the total cost.  The planning ministry also supported Sindh’s stand; though, the cost should be borne out by the province.  The CDWP considered revised PC-I of Rs46.55 billion in March 2016 but it was deferred.