Recent developments appear to have sealed the fate of the Lahore Mass Transit System once and for all. The last time one had the opportunity to comment on the project in an earlier column (Bullet…Train), we left the government of the Punjab swaying in the arms of Norinco (pardon the pun),a weapons manufacturing company from China. If whispers from the corridors of power are to be believed then it seems our government’s square dance has suddenly become a Danse Macabre which threatens to bring all talk of a Mass Transit System to a grinding halt.
The gusto with which the government pitched efficient mobility for a population of nearly ten million people would have you believe that there is indeed a light at the end of the tunnel for our public transport woes. However it’s now been confirmed that the light is definitely not a train approaching us. What’s revealed is that there is no light at the end of the tunnel at all but a stone wall. And that’s what we find the government rubbing its nose against this week. Surely they knew the party couldn’t go on forever.
We’ve grown accustomed to thinking of China as a benevolent and powerful friend to the land of the Pure. But when we open up our economy to them, we become so focused on the next photo-op or ribbon cutting ceremony that we forget Chinese companies are here for business and not charity. So it shouldn’t come as a surprise to learn that the latest list of demands from Norinco have thrown into disarray any plans for getting the project off the ground. And for the first time since this square dance started, the naysayers and supporters of the project finally stand on common ground. Ironically, the only good thing about the government right now may just be its inability to meet the demands Norinco has made.
The main working procedure before commencement of the project requires the Lahore Transport Company to apply for a loan of nearly 1.8 billion dollars to the China Export Import Bank and to discuss and finalise the project with Norinco. As one had a hand in establishing the Lahore Transport Company in another life, it is easy to see how such technical interaction is neither within its capacity or authority. So when the first step towards our Mass Transit System is to leapfrog over the financial rules and regular institutions of the government, there is cause for concern.
As if this was not enough to send alarm bells ringing in the civil secretariat, other demands made by Norinco are even less practical and betray a severe lack of understanding of our institutions and their inefficiencies. For example, Norinco has requested that the Lahore Transport Company complete land acquisition, removal of cables and wires, and prepares all the other required site construction working conditions.
What is most unsettling about this arrangement is that it imposes such an onerous condition without taking into account the tribulations of our land acquisition regime and the pitfalls of clearing an area of its inhabitants and providing for their resettlement and rehabilitation. Such hidden social costs are expected to lead to many unhappy surprises if ever the demands of Norinco are met.
Perhaps the most perilous obligation for the government is a demand that the Lahore Transport Company make an advance payment to Norinco prior to land preparation and design finalisation, and then gets reimbursed through expensive loans to be provided by the Chinese financing institutions. And loan applications just don’t get approved. There are requirements for guarantees, no objection certificates, feasibility studies, financial statements, and all manner of documentation just to get the application into the system. And for projects worth more than a hundred million dollars, the application is also submitted to the Chinese Ministry of Foreign Affairs and Ministry of Finance following which the application goes before the State Council for approval. It may seem like a long-winded process but the net effect is that the Mass Transit System, in its present shape and form is a total non-starter.
So it would seem that unless Norinco lowers its expectations and decides to impose only reasonable obligations upon the Government of the Punjab, the Mass Transit System is going nowhere fast. Alternatively, the government can always resume discussions for financing of the Mass Transit System through bilateral and multi-lateral donors who had earlier pledged to make funds available at a nominal cost, but perhaps the incumbent administration is too proud to be seen to be going back to the drawing board.
The writer is a consultant on public policy.