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Elevated Expressway to Make Lahore Rapid Mass Transit Project Obsolete

NESPAK official says project execution would require international firm with good track record
* TEPA official says LRMT of greater social utility
* Steering committee chairman says available funding will be considered

By Mansab Dogar

LAHORE: The Punjab government’s plan to construct an elevated expressway from Kainchi Stop to the Niazi Interchange will render the Lahore Rapid Mass Transit (LRMT) project obsolete, said experts associated with the project.

The experts told Daily Times that the elevated expressway is estimated to cost Rs 40 – 50 billion while the LRMT project would have cost the government about three billion dollars. A National Engineering Services of Pakistan (NESPAK) official said that the department had prepared a feasibility of the expressway, which will be presented to the government soon. According to the report, the expressway will have two lanes on both sides, and would be supported with pillars erected on the greenbelt running down the middle of the Ferozepur Road. He added that a couple of unavoidable linkages would be provided, which have not been determined yet.

International: The official maintained that the project was very practical and would cost about Rs 50 billion. He said that only international firms with a good track records could execute the project with limited local expertise. If this project is completed, there is very little chance that the LRMT will ever be undertaken, he added.

Utility: A Traffic Engineering and Planning Agency (TEPA) official associated with the LRMT project said that the LRMT project was better as it benefited commuters more than car owners, adding that the elevated expressway was designed to facilitate private vehicle owners. However, he admitted that as far as cost effectiveness was concerned, the expressway was far cheaper and would be completed much faster than the LRMT project, which would take at least another five years.

Funding: Lahore Road Rehabilitation Programme Phase-II Steering Committee Chairman Khawaja Ahmad Hassan said that the committee was waiting for a presentation on the expressway project, adding that the utility of both projects for the city would be evaluated before any final decision was taken. He said that the LRMT was undoubtedly a larger project in terms of monetary expenditures, adding that the availability of funding for either project would also be taken into account.

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Dear Chief Minister ...... Please, please, please dont abondon the Lahore Mass Transit Project. Please do consider the ADB assistance and lot of money being spent on this project in making its feasibiltiy. Please dont think that this project was started by previous government and its should be given up. Please

Dubai Metro Inaugurated

So at Last the Dubai Metro Project started at last wonderful. The video of inauguration is available at the following link.

http://www.sheikhmohammed.co.ae/vgn-ext-templating/v/index.jsp?vgnextoid=249b9ef38a08c110VgnVCM1000007064a8c0RCRD&vgnextchannel=063e4c8631cb4110VgnVCM100000b0140a0aRCRD&vgnextfmt=video&videoId=249b9ef38a08c110VgnVCM1000007064a8c0RCRD

Punjab may request Japanese help for Lahore Mass Transit Project & Khanki Dama: CM

* Shahbaz identifies provision of better health facilities as top priority
* Says security, economic problems biggest issues facing country
* Chihiro says Japan can benefit from investment in Pakistan

Staff Report

LAHORE: Japan has excellent expertise in constucting dams and the Punjab government wants to seek their help to construct the Khanki Dam, Chief Minister Shahbaz Sharif told Japanese Ambassador Chihiro Atsumi on Tuesday.

Shahbaz informed the guest of his priorities regarding the elimination of poverty, provision of health and education and various other basic facilities.

Relations: He said that the ties between Japan and Pakistan spanned over many decades, adding that Japan had always helped Pakistan with provision of financial and technical assistance. He said that the Punjab government would welcome any delegation sent by Japan to explore the possibility of co-operation between the two countries. He said that construction of small dams and water reservoirs for the promotion of agriculture was of immense importance, adding that Punjab could greatly benefit from Japanese skills in this sector.

He said that Japan could also help in the improvement of the sewerage system, solid waste management and Lahore Rail Mass Transit project for the provision of better transport facilities. He said that there were also opportunities for the installation of hydroelectric power plants under public and private partnerships. He said that he had visited Japan a long time ago as a businessman and was deeply impressed with the skills possessed by the Japanese nation. He said that his top priority was the provision of better health facilities to the people, adding that revolutionary measures had been taken in this sector. He said that Japan could extend co-operation in the provision of health, education and transport facilities.

He said that Pakistan was facing several challenges, of which security and economic problems were the most difficult to handle. He said that the country had always condemned terrorism and extremism and was itself a victim of this menace. He said that the country maintained a clear stance on eradication of terrorism, adding that the government would always give preference to the option of dialogue over the use of force. He said that the removal of deprivations, economic disparities, provision of prompt justice, health and education facilities, improvement of infrastructure and good governance were essential for this.

Ambassador: Chihiro said that Pakistan was a trustworthy friend of Japan and Japan was keen to further strengthen ties with the country. He said that the Japanese company, JICA, was playing an important role in providing the water supply and drainage, irrigation and economic activities in Punjab. He said that Pakistan had vast opportunities of investment and Japan would further promote mutual relations with the country to benefit from these opportunities as well as to continue its co-operation in various sectors. He said that bilateral relations between the two countries were improving with the passage of time

Lahore Rapid Mass Transit System: Pakistan asked to Complete PPP Transaction

FAISALABAD (October 06 2008): Asian Development Bank has asked the Government to complete Public-Private Partnership (PPP) transaction for Private Sector Concession by October 2009, while ADB multi-tranche financing facility loan will be approved for public sector investment by December 2008 for Lahore Rapid Mass Transit System Project.

According to official sources, the Government understands that developing the Lahore RMTS with a PPP would provide an opportunity to improve the overall efficiency of the system. A PPP provides the Government with an opportunity to efficiently allocate risks between the Government and specialised private firms.

This means that risks will be controlled and influenced by the party that is best placed to control and influence these risks.

A PPP, however, would not make sense for the Government or private sector if either party were bearing risks that are better handled by the other. This means that a well-structured PPP is essential to achieve the objectives expected from a PPP.

ADB experts citing examples of key issues that need to be resolved as part of structuring a PPP transaction, include the following:

(i) Public versus private funding. The passenger fares that the Government plans to charge for the green line will not cover the full cost of building, operating, and maintaining the line. The Government will need to subsidise a portion of the capital costs. What portion would be funded by the Government, where would these funds come from, and how would these funds be paid are key issues to be resolved.

(ii) Ridership risk. While the Government should bear part of the ridership risk, the private operator should also have incentives to maximise ridership. Thus the private operator should bear a portion of the ridership risk. What portion and under what terms are key issues to be resolved.

Prior to consideration of ADB project financing, ADB should update project reports mentioned. Engagement of a transaction advisor is required to formulate financial structuring, undertake detailed due diligence, and package the Lahore RMTS to attract private capital and management.

The transaction advisor, in close consultation with ADB and the Government, will help prepare and launch a PPP transaction for the green line. ADB is willing, in principle, to partly finance the public-sector-financed portion of the Project under the multi-tranche financing facility modality.

ADB experts disclosed that the transaction advisory work will be carried out in three phases: preparation, implementation, and negotiation. During the preparation phase, the transaction advisor will carry out technical and legal due diligence, design the detailed structure and terms of the transaction, market the transaction with potential investors, and develop prequalification and bidding documents as well as the necessary contracts.

During implementation, the transaction advisor will assist the Government in obtaining any approvals and permits required, pre-qualifying potential investors, carrying out the bidding process, evaluating proposals, awarding the contract, and holding negotiations with lenders. During the negotiation, the transaction advisor will support the Government and winning bidder reach financial closure.

PHASE I, TRANSACTION PREPARATION:

The transaction preparatory work will include technical, legal, regulatory, financial, and safeguards due diligence in support of the proposed transaction. The transaction advisor will lead efforts to market the transaction, including tasks such as (i) preparation of initial marketing document, an information memorandum, and presentations; (ii) preparation of a list of investors that have the qualifications and experience to be the project counterpart; and (iii) consultations with potential investors and lenders to share information about the Lahore RMTS. The transaction advisor will also advise on progress made in preparing the transaction; and review feedback on the design of the transaction. International road shows may be required.

Phase II, Transaction Implementation

The transaction advisor will assist the Government in obtaining or issuing the necessary permits or approvals needed for implementing the transaction for the Project. These might include approval to (i) create and fund a subsidy account, (ii) issue a government guarantee, and (iii) launch prequalification and bidding process. The transaction advisor will assist the Government in (i) issuing the request for prequalification, responding to questions from interested parties, evaluating the expressions of interest, and selecting a short list of firms; (ii) issuing the request for proposals and responding to questions from bidders; and (iii) assessing the legal compliance of the proposals, evaluating the quality of the technical proposals and competitiveness of the financial proposals, and making an award decision.

PHASE III, NEGOTIATIONS:

Following the award of the contract to a bidder, financial closure for the transaction will require several months. During this period, the transaction advisor will assist the prospective lenders of the winning bidder in carrying out their credit analysis and, to the extent needed, assist the Government in negotiating with these lenders.

It may be recalled that the investment cost of the TA project, to finance the recruitment of transaction advisor, is estimated at $7.5 million equivalent, including foreign exchange costs of $6.0 million and local currency costs of $1.5 million equivalent. The TA will improve the urban rapid mass transportation network in Lahore. The outcome of the TA is a structured design for the Lahore RMTS Project feasible for ADB financing.