KCR Project referred to executive body

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The case of revival of Karachi Circular Railway Project will be referred back to executive committee of the National Economic Council (ECNEC) as keeping it outside Public Sector Development Program (PSDP) is not feasible. This was disclosed in a briefing given to the Prime Minister last month that after a series of meetings at various forums Secretary Finance Chaired a meeting on 4th November, 2011 and recommended that case may be referred back to ECNEC that keeping the project outside PSDP is not feasible.
Moreover, other recommendations made by the secretary include that loan to be on-lent with minimal economic burden on KCR Project; loan from Japan International Cooperation Agency (JICA) to Economic Affairs Division (EAD) may be on-lent to Ministry of Railways for KCR as development project of Ministry of Railways to avoid re-lending charges; in case of any recurring operational losses, the same should be borne by share holders of Karachi Urban Transport Corporation (KUTC) proportionate to their shares in KUTC; and inclusion of KCR in PSDP of MOR without disturbing its portfolio.
While present status of the project is that a team of JICA experts from Tokyo, Japan are working in KUTC Office since September 2011 for Study of SAPROF-II on KCR Project, while feasibility study of resettlement site is in process and would be completed by 30th December, 2011. However, one of the pending issues of the project is the issuance of notification for legal coverage, as at present compensation to PAPs (Project Affected Persons) and non title holders PAPs are not covered by law because National Resettlement Policy Ordinance March-2002 has lapsed. It is to be noted that in the sixth meeting of Board of Directors of KUTC held on 29th November, 2010 chaired by Chief Secretary Sindh/Chairman KUTC Board. It was decided that a notification is to be issued by government of Sindh with consultation of provincial Secretary Law, and Secretary Imp. (SGA&CD) will be the focal person for the same.
And Secretary Law, Sindh, after vetting the Notification (June 14, 2011) returned it to Secretary Imp. (SGA&CD), so the matter of issuance of notification is under process with government of Sindh. Another pending issue is the confirmation of transfer of Pakistan Railway land to KUTC required for KCR from PR to KUTC. Executive Committee of Railway Board decided (March 22, 2010) for transfer of 100 acres land along UP Mainline from Karachi City to Drigh Road Station; Along KCR Loop entire PR land (225 Acres); Suit land at Jumma Goth will be utilised by KUTC for Resettlement of PAPs and balance suit land will be utilised by PR for operational purposes. Ministry of Railway in a meeting with JICA on 16th June, 2011 agreed to transfer the required land to KUTC on lease basis after signing of loan agreement. On JICA request, MoR issued “Letter of Comfort” to transfer the required Pakistan Railways land to KUTC on 60 years lease on concession rates. JICA agrees on 60 years lease for RoW land but desires 99 years lease period for Resettlement Site and Real Estate Development, the briefing stated.

History of KCR

KCR was constructed, opened and operated for traffic by Pakistan Railways in the year 1964 and was patronised till 1984. Due to lack of investment in infrastructure, etc the operational efficiency was marginalised resulting in reduction of passengers and eventually was closed in December 1999.

Revival of KCR

In December 2004, government of Pakistan decided to revive KCR as modern commuter system for the citizens of Karachi. It was also decided that KUTC will be formed with Ministry of Railways, government of Sindh and City District government. Karachi (CDGK) as shareholders in the ratio of their equity sharing 60 per cent, 25 per cent, and 15 per cent respectively.
KUTC has been incorporated with SECP on 8th May, 2008 with nine directors and Chief Secretary Sindh is Ex-Officio Chairman of KUTC board. President during his visit to Karachi on 20th April, 2009 had very kindly consented to the execution of Revival of KCR Project with International help. President further directed that a Resettlement Action Plan (RAP) should be prepared immediately for Project Affected Persons (PAPs). Only 20 per cent of the Right of Way of KCR has squatters (4653 Household unit)

Funding

JICA will arrange 93.5 per cent cost of the project ($1457.7 million) through Soft Term Loan at a markup of 0.2 per cent repayable in 40 years including 10 years grace period and remaining 6.5 per cent cost ($101.1 million) will be borne by stakeholders of KUTC (PR, GOS and CDGK) as per their respective equity share. It is to be noted that release of funds by stakeholders for FY 2011-12 includes Rs1237.2m from Pakistan Railway, Rs515.5 million by government of Sindh, and Rs309.3 million by CDGK out of total Rs2062 million.

Public Private Partnership

A consortium of international Consultants will be engaged for design, drawings, preparing tender documents, appointment of consultants and contractors, certification of payments by JICA/Experts at Karachi and release on approval by JICA, Tokyo, and project monitoring and evaluation.
According to the time line of the project, appraisal by JICA will be received by December 2011/January 2012; pledge/loan agreement by April/May 2012; and project commencement by June 2012. The completion period will be comprised after 3 years after the completion of Resettlement of Project Affectees.

Approvals and Studies

n Donor Agency JICA, sponsored a study named SAPROF (Special Assistance for Project Formation) for Project and the final report was received in May-2009 at estimated cost $1558.8Ml.
n Environmental Impact Assessment study approved by Environmental Protection Agency (EPA), GOS on July 4, 2009.
n ECNEC approved PC-I of the Project on 3rd September, 2009 cost: $1.558 billion. (Rs128.6 billion at 1US$=Rs.82.50).
n IEE Report of Resettlement Site for PAPs of KCR Project approved by EPA on 26th May, 2010.
n Satellite Imagery of KCR route has been completed by SUPARCO on 26th October, 2009.
n RAP Study of PAPs (4653 Nos.) prepared in conformity with World Bank, ADB, IFC guidelines and finalised to the satisfaction Donor Agency JICA. Approval received by Donor Agency JICA, Tokyo on 28th July, 2011.