234 executive board meeting of nha

8/9/2019 234 Executive Board Meeting of NHA

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234th Meeting, April 22, 2014, Islamabad

NHA Executive Board’s Confirmed Minutes

1

NATIONAL HIGHWAY AUTHORITY

Secretariat Section

CONFIRMED MINUTES

Subject: 234th Meeting of the NHA Executive Board held on Apr

22, 2014 at Islamabad

1. Introduction

1.1. The 234th meeting of the Executive Board of the National

Highway Authority was held at 1430 hours on Apr 22, 2014 at the

NHA Head Office Auditorium, Islamabad. Mr Shahid Ashraf Tarar,

Chairman NHA presided. List of participants is at Annex-A.

1.2. The meeting commenced with recitation of verses from the

Holy Quran and Urdu translation.

2. Opening Remarks - Chairman NHA

2.1. The Chairman extended warm welcome to the participants

of meeting and informed the Board Members about his activities

throughout the period in view of the ensuing projects, with particular

emphasis on Karachi - Lahore Motorway and China-Pak Economic

Corridor.

2.2. The Chairman further stressed upon the importance of Overlay and Modernization of Lahore - Islamabad Motorway (M-2) on

Build-Operate-Transfer (BOT) basis in the wake of financial

constraints. He informed the Board that during discussion and

sharing of the proposal, the Prime Minister of Pakistan has shown his

keen interest for finalization of the proposal with FWO.


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3. Presentation by GM (P&CA) Regarding Award of

Leftover Works of Gawadar - Ratodero Road Project

(M-8)

3.1. In relation to the decision of 233rd Executive Board

meeting in respect of Additional Agenda Items No I, II & III; the GM

(P&CA) presented the case for award of works for Turbat - Hoshab

Sec-IIA Km (0+000 to 76+250) and Gwadar-Turbat Sec-I Pack-IIB Km

(100+800 to 164+250) of M-8.

3.2. It was explained that in view of peculiar circumstances of

the project referring to law & order situation in particular and the fact

that only FWO participated and their bid was technically qualified for

Gwadar-Turbat-Hoshab Section (M-8). Moreover, FWO had brought

down the bid cost considerably as a result of series of meetings at

various fora ie Prime Minister of Pakistan, Chief of the Army Staff,

Senate Standing Committees for Communications and Ports &

Shipping.

3.3. During the previous meeting, the Board accorded

approval for award of the works for Gwadar - Turbat Section-I

Package-IIA Km (47+200 to 100+800) to FWO at their evaluated /

rebated bid price of Rs 4,000,714,728/-, which is 56.47% above the

Engineer’s Estimates of Rs 2,556,795,894/- based on CSR-2013.

3.4. The Board, however, in relation to Turbat - Hoshab Sec-

IIA Km (0+000 to 76+250) and Gwadar-Turbat Sec-I Pack-IIB Km

(100+800 to 164+250), decided that FWO should revisit their bid and

the rates be rationalized at par with the aforementioned package ie

56.47% above the Engineer’s Estimates.

3.5. The GM (P&CA) further pointed out that FWO adjusted

the bid price for Turbat - Hoshab Sec-IIA and Gwadar-Turbat Sec-I

Pack-IIB. The bid price for Turbat - Hoshab Sec-IIA has been reduced

by FWO from 64.45% to 56.47%. However, for Gwadar-Turbat Sec-I

Pack-IIB; the bid price was reduced from 70.81% to 56.47%, only after

re-appropriation of quantities and in case of no change in quantities;

the bid price would become 63.31% above Engineer’s Estimate.


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3.6. The Board Members observed that reduction in bid price

is due to change in scope of work (re-appropriation of quantities),

which is not a desirable option.

Decision

3.7. The Board Members decided that NHA should pursue

with FWO to review the rates and get the bid price reduced at par with

Gwadar - Turbat Sec-I Pack-IIA ie 56.47% or below without reducing

the scope of work.

Note. In 235 th Executive Board meeting of May 22, 2014, during confirmation of

minutes of 234 th Executive Board meeting, the Member (Planning) briefed the

Board that in accordance with the aforementioned decision all three contracts

of Gwadar - Turbat - Hoshab Section of M-8 are awarded to FWO having bid

price 56.47% above Engineer’s Estimate without reducing the scope of work.

The Board approved the said award of works.

Action By : GM (P&CA)

FORMAL BOARD PROCEEDINGS

4. Agenda Items

4.1. The Secretary NHA stated that 16 x working papers were

circulated in two volumes. Subject-wise distribution is as follows:-

Item No

a. Confirmation of minutes of 233rd meeting 1

b. Finance matter 1

c. Planning matters 3

d. Construction matters 5

e. ided Projects matters 1

f. Operation matter 4

g. Secretary NHA 1

Total 16

4.2. The Secretary NHA added that following working papers

will be tabled if permitted by the Board:-

a. Overlay and Modernization of Lahore - Islamabad

Motorway (M-2) on Build-Operate-Transfer (BOT) Basis.


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b. Report of the Executive Board Committee on Elevation

of NHA Employees.

5. Agenda Item 1

Confirmation of Minutes - 233rd Meeting of the

Executive Board Held on Mar 20, 2014

5.1. The Secretary NHA solicited confirmation of minutes of

233rd Executive Board meeting held on Mar 20, 2014.

5.2. Minutes were accepted for confirmation with some

amendments.

Decision

5.3. The Executive Board confirmed minutes of 233rd meeting

held on Mar 20, 2014 with the following amendments:-

a. In Agenda Item No 2 titled “Amended PC-I for

Improvement & Widening of Jaglot-Skardu Road,

S-I (163.821 Km)” second last sentence in Para-5.14

may be amended as follow:-

For: ……. The VP-NESPAK further desired that

the contract should include the contents

similar to the addendum signed in CRBC

case, which identified various activity

locations. ……..

Read: ……. The VP-NESPAK further desired that the contract should include various

binding requirements at specific locations,

similar to the addendum signed in CRBC

case. …….

Suggested by VP-NESPAK


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b. In Additional Agenda Items I, II & III regarding

“Construction of Leftover Works of Gwadar - Turbat

- Hoshab Road Project (M-8)” rephrase Paras -22.10

& 22.12 as below:-

22.10. The Board Members unanimously

suggested that the percentage above the Engineer’s

Estimates for remaining packages may be brought at

the level of first package. The Chairman agreed to

the suggestion and instructed GM (P&CA) to approach FWO in order to achieve further reduction

in percentage.

22.12. The Chairman highlighted that due to

prevailing law & order situation and strategic nature

of the project, which will not only help operationalize

the Gwadar Port but also be instrumental in ensuring

access to the area; thus special dispensation of the

project is warranted.

Suggested by Additional Secretary (Finance)

Action By : Secretary NHA

6. Agenda Item 2

Policy for Construction of new Interchanges on NHA

Network Not Qualifying GoP’s Criteria but Required

by the Private Sector for Access to Business or

Residential Area

6.1. The subject agenda item was not discussed due to paucity

of time.

Action By : Secretary NHA


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7. Agenda Item 3

Award of Maintenance Contract for KKH (Km 218-

350) to FWO for FY 2013-14 on Terms & Length

Based on Performance Indicators


of time.

Action By : Member (Operations)

8. Agenda Item 4

Engineer’s Estimate for Widening & Improvement of

Tarnol Railway Crossing at Km 1553+393 (NBC/SBC)

on National Highway (N-5)

Proposal

8.1. The Executive Board is requested to accord approval of

Engineer’s Estimate amounting to Rs 247,625,734/- for widening and

improvement of Tarnol Railway Crossing at Km 1553+218 - 1555+393

on N-5 through Road Maintenance Account (RMA) under Special

Maintenance Allocation out of AMP 2014 -15.

Deliberation

8.2. The Member (Operations) presented the case. He briefed

the Board about the necessity of the project and mentioned that the

construction of the grade separated facility (flyover / underpass) to

provide free flow of traffic to ease off the congestion would be

ultimately required as a long term solution. However, keeping in viewthe financial and time constraints NHA has planned for immediate

widening & geometric improvement of Tarnol intersection at N-5

through provision of additional lanes, closed U-turns, 4x Class-I

Railway Crossing gates and improvement of pavement condition; is

the instant requirement.

8.3. The Member (Operations) further explained that the

proposed widening & improvement at grade will serve for at least 10

years and will facilitate about 70,000 vehicles per day and reduce


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vehicular operating cost (VOC), including but not limited to reduced

travel time, considerable reduction in delay, saving in cost of fuel,

reduction in accidents and reduced cargo cost.

8.4. The Member (Operations) apprised that Pakistan Railways

authorities have also been taken onboard regarding the said proposal

to which they have consented.

8.5. The VP-NESPAK, Chief (T&C) & IG (NH&MP) were of the

view that a flyover or an underpass should be provided at said

location to provide a long term permanent solution to traffic

congestion, instead of construction of outer lane facility. The Member

(Planning) explained that if NHA is going to start construction of flyover or underpass there will be no option for plying of traffic on the

road due to constricted working space. He further explained that we

may agree for provision of additional lanes, as a short term solution,

which will not go waste at the time of construction of grade separated

facility as a long term solution.

8.6. The Chairman NHA responded to the Board that he has

personally visited the site and noticed substantial traffic congestion

particularly emergency vehicles remained stuck for considerableduration. He further stated that the current proposal of widening &

improvement at Turnol Level Crossing (N-5) is an inescapable short

term requirement. The ultimate long term solution would rightly be a

grade separated facility.

8.7. The Board deliberated and cleared the proposal.

Decision

8.8. The NHA Executive Board approved the Engineer’s

Estimate amounting to Rs 247,625,734/- (Rupees two hundred & forty

seven million, six hundred & twenty five thousand, seven hundred & thirty four)

only for widening and improvement of Tarnol Railway Crossing at Km

1553+218 - 1555+393 on N-5 through Road Maintenance Account

(RMA) under Special Maintenance Allocation out of AMP 2014 -15.



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9. Agenda Item 5

Construction of Road Safety Training Institute OfficeBuilding, Islamabad

Proposal

9.1. The Executive Board is requested to accord the approval

of Engineer’s Estimate amounting to Rs 198,362,807/- for

construction work of Road Safety Training Institute Office Building

(including Drivers Training Authority Complex and residential building) through

NH&MP Fine Share.

Deliberation

9.2. The Member (Operations) presented the case.

9.3. The Chief (T&C) observed that the instant case does not

fall under the purview of NHA Executive Board, thus it should not be

presented in this meeting. The Director (RAMS) explained that it is a

deposit work on the land of NH&MP and the Inspector General

(NH&MP) has accorded approval for releasing funds out of fine

collection share of motorway police.

9.4. The Chairman was of the view that presentation of

proposal at this stage before the Board was not required. The proposal

may be placed after completion of tendering process for approval of

award of contract. The Board supported the version of Chairman.

Decision

9.5. The NHA Executive Board cleared the proposal with the

direction that the case be submitted for approval of award of contract

after completion of tendering process.



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10. Agenda Item 6

Revised PC-I: Dualization of N-70 / M-4 Link

Interchange-Punjab (Nagshah Chowk) Multan Crossing

N-70 From Multan to Shujaabad

Agenda Item 7

Addendum-3 of M/s A.A Associates: Construction of

Approach Road on Larkana Side of Larkana Khairpur

Bridge (Pack-I & IV)

Agenda Item 8

Revised Addendum-15 of M/s EA Consulting (Pvt) Ltd

for Construction Supervision of Lyari Expressway

Project

Agenda Item 9

Addendum-4 of M/s EA Consulting (Pvt) Ltd for

Consultancy Supervision of Improvement of Inner

City Ring Road, Multan Project

10.1. The subject agenda items were not discussed due to

paucity of time.

Action By : Member (Construction)

11. Agenda Item 10

Revised PC-I for Land Acquisition, PropertyCompensation and Shifting of Utilities at Faisalabad-

Khanewal Motorway (M-4)


of time.

Action By : Member (Aided Projects)


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12. Agenda Item 11

Enlistment of Security General Insurance Company

Ltd Having AA-(minus) Credit Rating on Approved

Panel of NHA for Construction Contracts


of time.

Action By : Member (Finance)

13. Agenda Item 12

PC-I for Land Acquisition, Affected Properties

Compensation & and Relocation of Utilities for

Construction of 959 Km Karachi-Lahore Motorway

(KLM) (Excluding 136 Km of M-9 and 57 Km of under

Construction M-4)

Proposal

13.1. The Executive Board is requested for recommendation of

PC-1 for Land Acquisition, Property Compensation and Shifting of

Utilities for Construction of 959 Km Karachi – Lahore Motorway (KLM)

at an estimated cost of Rs. 60,590 million for submission to the CDWP

/ ECNEC.

Deliberation

13.2. The Member (Planning) briefed the Board. The VP-

NESPAK observed that cost of land seems on higher side as compared

to that of Pindi Bhattian - Faisalabad Motorway (M-3), which requiresdue diligence.

13.3. The Chairman responded that it is an estimated /

projected cost and actual cost would be based on the input to be

provided by the respective Revenue Authorities of the Sindh & Punjab

Provinces and due care shall be taken in finalization of land cost.



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Decision

13.5. The Executive Board recommended PC-I for land

acquisition, property compensation and shifting of utilities for

Construction of 959 Km Karachi - Lahore Motorway (KLM) at an

estimated cost of Rs. 60,590 million for submission to the CDWP /

ECNEC.

Action By : Member (Planning)

14. Agenda Item 13

Award of Works for Construction of Approach Road

from Kot Mithan to N-55 (from Km 23+000 to Km

31+094) Shaheed Benazir Bhutto Bridge Over River

Indus Connecting Chachran Sharif to Kot Mithan

(Package – I)


of time.


15. Agenda Item 14

PC – I for Improvement and Widening of Mingora –

Fatehpur Section (45 Km) of National Highway (N-95)

Proposal

15.1. The Executive Board is requested to clear the PC-I for

Improvement & Widening of Mingora – Fatehpur Section (N-95, 45KM) costing Rs 4,521.739 Million and recommend its onward

forwarding to the Provincial Reconstruction, Rehabilitation Authority

(PaRRSA), Govt of Khyber Pakhtunkhwa.

Deliberation

15.2. The Member (Planning) presented the case. He apprised

that the project is being financed by Saudi Fund for Development

(SFD) through Provincial Reconstruction, Rehabilitation Authority


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(PaRRSA). Technical Working Party (TWP-I) in its 20th meeting held on

Mar 27, 2014 recommended the PC-I for submission to NHA Executive

Board.

15.3. The VP-NESPAK observed that design of the project has to

be rationalized after traffic survey.


Decision

15.5. The Executive Board cleared the PC-I for Improvement &

Widening of Mingora – Fatehpur Section (N-95, 45 KM) with

rationalized cost after revisiting. Traffic survey to rationalize design

and recommended rationalized PC-I for onward forwarding to the

Provincial Reconstruction, Rehabilitation Authority (PaRRSA), Govt of

Khyber Pakhtunkhwa subject to completion of codal formalities.


16. Agenda Item 15

Policy Decision Regarding Award of works to FWO on

Single Tender Basis, Exemption of Income Tax &

Performance Guarantee


of time.


17. Agenda Item 16

Revised PC-I for Construction of Kolpur Bypass Road

Project (N-65)


of time.

Action By : Member (Construction)


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18. Additional Agenda Item-IOverlay and Modernization of Lahore - IslamabadMotorway (M-2) on Build-Operate-Transfer (BOT) Basis

Proposal

18.1. The Executive Board is requested to approve the draft

Concession Agreement for signing with M/s Motorway Operations and

Rehabilitation Engineering Company (Pvt) Ltd for “Overlay and

Modernization of Lahore - Islamabad Motorway (M-2) on Build-

Operate-Transfer (BOT) Basis.”

Deliberation

18.2. The Director (PPP) presented the case and briefed the

Board as under.

18.3. The M-2 has completed its design life and most of its part

is showing deterioration, resultantly the riding quality is deteriorating

very fast. Virtually, it demands complete overlay. Keeping in view the

condition of M-2, NHA has initiated efforts to save this most important

segment of Trans-Pakistan Motorway, which will ultimately help keep

the Motorway Network financially sustainable. It is feared that if thisvery much required overlay / improvement program is delayed then

the M-2 will enter into rehabilitation mode and will require an

investment level of 4 to 5 times (over 100 billion Rupees ) higher than

the present day requirement.

18.4. NHA decided to undertake the project through Public-

Private Partnership (“PPP”) under Build-Operate-Transfer (“BOT”)

arrangement, with the following objectives:

A. To improve existing M-2 to its as-built condition.B. To modernize the M-2 at par with International Motorway

Standards.C. To gain upfront money to the tune of Rs 19.00 billion.

18.5. NHA received the bids and processed for evaluation,

whereas, M/s Infrastructure Project Development Facility (“IPDF”) (a

subsidiary Ministry of Finance) established specifically for development

of PPP projects in the country , was involved throughout the process,

from evaluation of bids till negotiation / finalization of Concession


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Agreement. Out of total six (06) firms/joint ventures, who procured

RFP, only one, M/s Frontier Works Organization (FWO) / Zahir Khan

& Brother (Pvt) Ltd (ZKB) / Sachal Engineering (Pvt) Ltd (SACHAL),

(“’Joint Venture”) submitted bid, on 06-07-2012, to undertake the

Project on BOT basis. As a result of technical evaluation the Joint

Venture (JV) secured eighty six (86) points out of total 100 points and

qualified for opening of Financing Proposal. The Financial Proposal

was opened on 08-8-2012.

18.6. Detailed evaluation was undertaken by the committee.

M/s Infrastructure Project Development Facility (IPDF) assisted NHA

to undertake detailed evaluation of the Financial Proposal.

Subsequent to detailed evaluation, the NHA Evaluation Committee

declared the proposal as a “responsive proposal” and recommended

for issuance of a Letter of Support to Joint Venture. Pursuant to

recommendations of evaluation committee and approval of competent

authority, the Letter of Support (LOS) was issued to JV on 12-9-2012.

18.7. The Joint Venture has incorporated a project company

named Motorway Operations and Rehabilitation Engineering Company

(Private) Limited (“Concessionaire”) for the sole purpose of

implementation of the Project.

Series of meetings were held, between

NHA Concession Negotiation Committee and the Concessionaire's

team to finalize Concession Agreement.

18.8. As a result of detailed deliberations a Draft Concession

Agreement has been finalized for consideration and approval of NHA

Executive Board. Following are the salient features of final Draft

Concession Agreement:-

a. Scope of Work: As specified in the Request for

Proposal, issued by NHA and the Proposal of the

Joint Venture.

b. Concession Period: Twenty (20) years commencingfrom signing date.

c. Project Cost: Total Project Cost is PKR

36,825,000,000/- (Rupees thirty six billion, eight

hundred twenty five million only).


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d. Concession Area: Handing over of Concession Area

free of encumbrances is the responsibility of NHA.

e. Shifting of Public Utilities: The cost and expense

associated with the removal, relocation or diversion of

the Public Utilities and thereto necessary for

commencement of the Works, shall be borne by the

Concessionaire.

f. Financing Arrangement: The Concessionaire is

obliged to ensure following debt: equity ratio for

arranging funds for the Project:-

Debt (maximum) : 70% Equity (minimum) : 30%

g. Financial Close: The Concessionaire is obliged to

achieve Financial Close within six (06) months from

Effective Date, i.e. date of the signing of Concession

Agreement.

h. Construction Period: Construction period is thirty

six (36) months, commencing from achievement of

Financial Close.

i. Handing over of Tolling and Operational Rights: The

tolling and operational rights shall be handed over

upon achievement of Financial Close.

j. Toll during Construction Phase: Following toll rates

during construction phase shall be applied:

Sl No. Vehicle Type Toll Rate Rs./Km

1 Class 1: Cars/Jeeps/Taxis 0.79

2 Class 2: Wagons 1.32

3 Class 3: Buses 1.85

4 Class 4: 2-Axle Trucks 2.64


6 Class 6: Articulated Trucks 4.42


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k. Base Year Toll Rates: Following toll rates shall be

applied on completion of construction, first year of

operation:

Sl No. Vehicle Type Toll Rate Rs./Km

1 Class 1: Cars/Jeeps/Taxis 1.58

2 Class 2: Wagons 2.64

3 Class 3: Buses 3.70



6 Class 6: Articulated Trucks 8.84

l. Annual Toll Escalation: The following annual Toll

escalation shall be applicable during the Operations

Phase:

i. Ten percent (10%) annual Toll escalation shall

be applied from the second (2nd) Operational

Year till the twelfth (12th) year of the Concession

Period; and

ii. Seven percent (7%) annual Toll escalation shall

be applicable from thirteenth (13th) year of the

Concession Period till last year of the

Concession Period.

m. Toll Exemptions: Following vehicles, as per NHA PPP

Policy and Regulatory Framework, shall be exempted

from payment of tolls:-

Provincial and National Highways & Motorway

Police

Fire Brigades

Ambulances

Armed Forces of Pakistan vehicles bearing broad

arrow number plates

Vehicles conveying MNAs / MPAs and Senators

in person

Vehicles having Supreme Court / High Court

Flags / Insignia Plates

n. Guaranteed Payments to NHA:


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(i) Guaranteed Payment to NHA

Upfront Guaranteed Payment of Rupees Nine

Thousand and Five Hundred Million only (PKR

9,500,000,000/-) shall be paid by the

Concessionaire to NHA upon achievement of

Financial Close.

(ii) Staggered Guaranteed Payment to NHA

The Concessionaire shall pay NHA’s, Staggered

Guaranteed Payment amounting to Rupees Nine

Thousand and Five Hundred Million only (PKR

9,500,000,000/-) during the fourth (4th) to

eighth (8th) years (five years) of the Concession

Period at the rate of Rupees One Thousand Nine

Hundred Million only (PKR 1,900,000,000/-) per

year.

o. Revenue sharing with NHA: The Concessionaire shall

pay to NHA, the revenue share, during the

concession period, as per following schedule:-

Sl

No.

Concession

Year

NHA Revenue Share

Percentage of Gross Profit

(Revenue minus collection losses, as

stipulated in the Financial Model)

1 11th 42.19%

2 12th 42.19%

3 13th 42.19%

4 14th 42.19%

5 15th 42.19%

6 16th 42.19%

7 17th 42.19%

8 18th 42.19%

9 19th 42.19%

10 20th 42.19%


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p. GoP/NHA’s Guarantee: Government of

Pakistan/NHA has not provided any type of

guarantee – traffic revenue, financial, commercial or

otherwise – to the Concessionaire.

18.9. Representatives of Legal and Financial Experts of M/s

Infrastructure Project Development Facility (IPDF), Ministry of Finance

and M/s AJURIS, Advocates & Corporate Counsel briefed the Board

with reference to the legal and financial aspects of the concession

agreement.

18.10. The Chairman explained the background and necessity of

the proposal as well as meetings with the Prime Minister andmanagement of FWO. The Chairman urged the Board to consider the

proposal and accord the requisite approval.

18.11. The VP-NESPAK viewed that 33% of M-2 and fast lane is

in good condition and asked that whether the IRI reported during the

presentation, is for slow lane or fast lane. The Member (Plg) replied

that average IRI of all 3-lanes was considered therein and the backup

data for each individual lane is available in the record.

18.12. JS (Admn) MoC / Chief NTRC opined that accident prone

location of Salt range should be considered in this project for

improvement. The Chairman NHA agreed to the opinion, in principle,

however, remarked that inclusion of such provision would have a

certain cost effect. VP-NESPAK also enquired about the land slide in

the area and NHA’s liability; the Member (Plg) explained that it is

covered under the agreement as concessionaire risks.

18.13. The Board Members enquired about the distribution of risks among the parties to the concession agreement. The legal

experts informed in this regard as under:-

a. Concessionaire risks: Financial & Commercial risks

i.e. financing; design; construction; and demand, etc.

b. NHA risks: Change of law; Political risks;

Termination Payments.


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18.14. The Chairman NHA informed the Board that completion

period, instead of 36 months as mentioned in the concession

agreement of first overlay has to be 24 months as mutually agreed

upon by the Concessionaire, during a meeting with the Prime

Minister.

18.15. It was observed by the VP-NESPAK that options other

than BOT should have also been evaluated with due diligence to have

a comprehensive financial comparison among various alternatives. He

also remarked that M-2 is a very valuable asset with a well established

revenue stream and therefore a “Public Sector Comparator” and

“Value for Money Analysis” should have been carried out before

pursuing the BOT option. He also referred to the observations of the

Board on draft Concession Agreement presented earlier in its 222nd

meeting of Oct 16, 2012. The Chief (T&C) also supported this

observation and asserted that comparison should have been

conducted on apple to apple basis. Director (PPP) explained that such

comparison has already been done. In the later part of presentation

IPDF presented detailed analysis of public sector comparator.

18.16. The Chief (T&C) enquired about the land within RoW of

M-2, which has been used to procure Sukuk bonds. The legal expert

clarified that there will be no effect of Sukuk transaction, if any, on

the Concession Agreement. It was further clarified that the title of the

land shall remain with the NHA.

18.17. The VP-NESPAK enquired that when the Concessionaire

will take over the site for commercial and construction activities. The

Member (BOT) informed that site will be handed over to theConcessionaire on financial close.

18.18. The JS (Admn) MoC / Chief NTRC enquired about the

terms & conditions of third party consultants. The representative of

M/s AJURIS informed that third party includes neutral entities i.e.

Quality Assurance Inspectors, Joint Auditors & Professional

Consultants etc, who will be engaged as per agreement and

parameters /ToRs jointly agreed by NHA and the Concessionaire.


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18.19. The VP-NESPAK enquired that who shall be responsible

for the construction of additional toll lanes if and when there is

considerable increase in traffic and need arises. The Member (Plg)

responded that such work will be considered as additional and will be

incorporated through a variation order. However, Chairman NHA

remarked that such important provision needs to be included in the

concession agreement.

18.20. The VP-NESPAK asked about the compensation and relief

admissible to the Concessionaire in case of changes in Laws which is

the risk of NHA. The Member (PPP) informed that the Concessionaire

will only be eligible for compensation in case of changes in legislation

concerning the concession agreement and escalation of prices of

materials is excluded.

18.21. The VP-NESPAK enquired about the handling of funds

received from the project. The Legal Experts of M/s IPDF responded

that NHA intends to create a fund under the nomenclature of

Contingent Liability Fund (CLF) / Road Development Fund (RDF) or

any other suitable modality by utilizing upfront payment of PKR 9.5

billion from FWO as a seed capital. All NHA’s revenue shares from

M-2 will go towards this fund and it will ensure servicing for toll short

fall in any given year. The fund would primarily be used to bridge

short fall in toll and may supplement the termination burden in case

NHA defaults. On a query by JS (MoC), regarding operation of this

proposed fund, the Chairman informed that this account will be

operated by NHA and an SOP shall be devised in this regard with the

approval of Board. The Chairman, on clarification sought by Chief (T&C), informed that this fund will have no concern with Road

Maintenance Account (RMA).

18.22. The JS (MoC) enquired about taking over of Service Areas

from M/s DPMSL which are presently under litigations. The Chairman

informed that, the concessionaire is well aware of this situation and

these shall be handed over as and when available.


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18.23. The IG (NH&MP) remarked that there must be a traffic

management plan before commencement of the construction on M-2

to ensure smooth flow of traffic and safety of commuters during

construction period. The Chairman supported the concern of the

honorable Member and assured that the Concessionaire will

incorporate a traffic plan in this regard, in consultation with NH&MP

and NHA.

18.24. The Additional Secretary (Fin) highlighted that there is no

financial liability or guarantee envisaged to Government of Pakistan or

NHA. It was confirmed that Concession Agreement contains following

understanding:

a. Government of Pakistan/NHA shall not provide any

type of guarantee–financial, commercial or otherwise.

b. Government of Pakistan/NHA shall not provide any

traffic or revenue guarantee.

c. Government of Pakistan/NHA shall not bear any

foreign currency risk.

18.25. The VP-NESPAK opined that 10% increase in the toll every

year may not be sustainable and ultimately create financial liabilities

for NHA if there is revenue shortfall for Concessionaire. The Financial

Experts of IPDF and KMR explained that in case of non-

implementation of agreed toll escalation CLF/RDF shall be there to

cater. M/s IPDF also presented a detailed different possible scenarios

for non-implementation of annual toll escalation. Under all possible

scenarios the CLF/RDF remains positive.

18.26. The Board appreciated the commendable job done by the

NHA and IPDF team for accomplishment of such an exhaustive task of

national importance and prayed that the project may materialize

successfully. The Board cautioned NHA to initiate appropriate

measures for making this prestigious project a success, which will

greatly help pave the way for attracting future private sector’s

investment.


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Decision

18.28. The Executive Board approved the proposal regarding

signing the concession agreement with M/s Motorway Operations and

Rehabilitation Engineering Company (Pvt) Ltd for “Overlay and

Modernization of Lahore-Islamabad Motorway (M-2) on Build-Operate-

Transfer (BOT) Basis” for 20 years.

Action By : Member (PPP)

19. Additional Agenda Item-II

Report of the Executive Board Committee on

Elevation of NHA Employees

19.1. The Member (Admn) presented the case with reference to

the Agenda Item in respect of following issues:-

a. Upgradation / Elevation of NHA Employees in BS 1 –

16.

b. Legality of past upgradation of NHA Employees by

NHA Executive Board.

c. Removal of Disparity of Service Structure between

NHA Employees.

Introduction – Working paper

19.2. Background: The proposal for upgradation and/or

elevation of NHA employees in BS 1 - 16 stems from a decision of the

Federal Service Tribunal, which found in favour of upgradation of

various cadres of Accounts and Audit Service of Pakistan in the case

of Syed Faiz Ali Shah & 260 others v. Secretary Finance & 2 others

through its judgment dated 12th May 2008. The judgment of the FST

was challenged by Secretary, Ministry of Finance, Controller General


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of Accounts, and Accountant General Punjab through inter alia

Constitutional Petition 325/2009 before the Supreme Court of

Pakistan. The Supreme Court however dismissed the petitions and

ordered the Controller General of Accounts, and Accountant General

Punjab to implement the FST’s decision within a period of 15 days.

Thereafter, officials of the Accounts and Audit Group/Cadre in various

organizations, other than the Controller General Accounts, and the

Accountant General Pakistan Revenue, were also upgraded by their

respective organizations (such as the Capital Development Authority,

Federal Board of Revenue, Pakistan Bail-ul-Maal, Pakistan Railway

etc.).

19.3. Background in NHA. These events lead to an application

by a number of NHA officials working in accounts, budget, and audit

posts, to seek upgradation of their posts along similar lines. The

matter was considered by the NHA Executive Board in its 196 th

Meeting on 4th October 2010, which decided that the issue was to be

analyzed and reviewed jointly by the Member (Admin) and Member

(Finance), and reported back to the NHA Executive Board. These

Members jointly analyzed the matter and noted that the applicant

employees of NHA were already enjoying additional benefits, in the

shape of project allowance/headquarter allowance, hiring facility,

medical facility, and official vehicle, as well as pick and drop facility,

in comparison to other departments under the control of the

Controller General Accounts, and the Auditor General of Pakistan. In

view thereof, they reported back to the NHA Executive Board that:

In view of the above additional benefits already available

to the NHA employees of these cadres as well as position of

running projects of NHA, the benefit of up-gradation to these employees seems not affordable .

19.4. Judgment of the Federal Service Tribunal. Thereafter,

various NHA employees working in accounts, budget, and audit posts,

sought upgradation of their posts through Appeals No. 976 to 1051

(R)CS/2011 titled Abdur Raziq Tareen & others v. NHA before the FST.

The FST announced its order on 13th September 2011, wherein it

decided that:


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The respondents have not passed a final order on the

grievance of the appellants. They are directed to pass an

order keeping in view Articles 37(s) and 38(e) of the

Constitution of the Islamabad Republic of Pakistan read

with Article 25. The recommendations of the senior officials

of the respondents shall also be taken into consideration.

The final order shall be passed preferably within three

months from the date of receipt of this order. With this

direction the appeals stand disposed of.

19.5. 209th Meeting of the Executive Board. In pursuance of the

FST’s judgment, the issue of ‘ Upgradation of the Posts of Audit and

Accounts Service ’ was considered at agenda item 18 by the NHA

Executive Board in its 209th meeting held on 3rd November 2011. The

working papers of this meeting had recommended to the Executive

Board, the approval of a proposal to upgrade various accounts/audit/

budget posts in NHA. Accordingly, the NHA Executive Board approved

the upgradation of the following posts in ‘ Audit and Accounts Cadre of

NHA ’:

No Post ExistingScale

RevisedScale

A AD (Accounts/Audit/Budget) BS-17 BS-18

B Superintendent(Accounts/Audit/Budget)

BS-16 BS-17

C Accounts/Audit/Budget Assistant BS-14 BS-16

D Senior Accounts Clerk BS-9 BS-14

E Junior Accounts Clerk BS-7 BS-11

19.6. This upgradation of posts was notified with effect from 3rd

November 2011 vide NHA notification no. 3(11)Admn(P)/NHA/2011/

1239 dated 28th December 2011, wherein, it was noted that the NHA

Executive Board had carried out the upgradation “in compliance of the

orders dated 13 th September 2011 of Federal Service Tribunal in

…Abdur Raziq Tareen & Others Vs. NHA etc.”, and in exercise of

powers conferred on it (i.e. the NHA Executive Board) under Rule

2(1)(b) and 3 of NHA Service Rules 1995.


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19.7. Other cases before the FST. A number of Non

audit/account/budget NHA officials filed appeals before the FST,

seeking among other things, increase in personal pay, upgradation of

posts, amendment to service rules, and removal of disparity in

different classes of service as a result of upgradation of account/

audit/budget posts. These appeals were decided by the FST vide its

order in appeal titled Naeem Khalid & others v. NHA etc , dated 7th

December 2011. Again, the FST directed NHA to:

… consider the claim made by the appellant and take

appropriate stage (sic) for their redressal, even if it involved

amendment in the service rules. The process may be

completed expeditiously, preferably within a period of four

months…

19.8. Proposal for ‘elevation’ of employees. The NHA’s Executive

Board took up the issue of upgradation of ALL non-upgraded NHA

employees in its 223rd Meeting held on 7th November 2012. The

Executive Board, decided that instead of upgrading all posts in the

manner proposed through the working paper, only deserving regular

employees would be ‘ elevated ’ to one pay scale above their existing

scale, and set out conditions for elevation. Under these conditions

only those employees would be elevated who:

a. Possessed the qualifying length of service for

promotion to the next higher post;

b. Had an overall grading of ‘good’ or above in their last

five performance evaluation reports, however for posts

where the rating proforma did not exist, this condition did not apply;

c. Had no disciplinary proceedings pending against

them; AND

d. The elevation would be a one-time exercise only and

upon the vacation of the post by an elevated

individual, the post would revert to its original scale.


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19.9. More cases before the FST. Thereafter, a number of

appeals were filed before the FST by the non-upgraded NHA employees

in BS 1–16, praying for their upgradation, along the lines of the

upgradation of posts of NHA employees serving on accounts, audit,

and budget posts. In one of these appeal, titled Asim Saeed Qazi etc. v.

National Highway Authority etc. the FST, in its order dated 10th

January 2013 observed that there was disparity in NHA’s pay scales

and ordered that:

…the respondents are directed to remove the disparity in

pay scales of the appellants viz-a-viz their contemporaries

in their department and other departments within six week

from the date a copy of the judgment is received in the

office of the respondents as they have already admitted in

their reply that the matter is under process .

19.10. Writ Petitions before Islamabad High Court. Thereafter,

due to no decision being made within the timeline provided by the FST

in inter alia, the case of Asim Saeed Qazi etc., the appellant therein,

and a number of other NHA employees, filed writ petition before the

Honourable Islamabad High Court. Writ Petition No. 1349/2013 titled

Asim Saeed Qazi v. NHA etc was disposed off by the IHC vide judgment

dated 21st November 2011, wherein it was stated that:

The respondent no. 1 is directed to implement the judgment

of the learned FST dated 10-01-2013 within a period of

four weeks from the receipt of this order, under intimation

to this court through Registrar .

19.11. Writ Petition No. 2024/2013 titled 2024/2013 titled

Sarbland Khan etc. v. Chairman NHA etc., and Writ Petition No. 2025/

2013 titled 2024/2013 titled Riaz Ahmad etc. v. Chairman NHA etc.

were disposed of by the IHC vide judgments dated respectively 27th

and 28th November 2011, through identical orders, wherein it was

stated that:

…the respondents are under an obligation to decide the

claim of the petitioners without any further loss of time. The


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respondents are directed to submit compliance report

within a period of one month .

19.12. In all three of the aforementioned petitions decided by the

Islamabad High Court (IHC), NHA managed to obtain one month’s

extension for compliance with the Court’s judgments however, no

decision was made even thereafter. Resultantly, in all three petitions,

Contempt of Court applications (Criminal Original No. 192/2014,

184/2014, and 185/2014) against the Chairman, NHA, and Member

(Administration) NHA have been filed, which are currently pending

before the Chief Justice, IHC, and in which the next date of hearing is

26th May 2014.

19.13. Proposals by Board Committee. NHA Executive Board, in

its 224th Meeting held on 7th January 2013 constituted a committee

comprising of Joint Secretary-II, Ministry of Communications, Chief

(T&C), P&D Division, and Member (Finance) NHA to submit a report

on the ‘ elevation ’ of NHA employees in BS 1 to 16. Director (Legal),

NHA was co-opted as a member of this committee. The committee, in

its report dated 23rd December 2013, recommended the following

options of NHA’s Executive Board:

i. a) All NHA employees in BS 1 – 16 to be elevated

to the next scale as per criteria already

approved by the Executive Board in its 223rd

Meeting held on 7.11.2012 (agenda item 10)

OR

b) For compliance of the Court orders, all the

appellants be up-graded at par with their

counterparts in Accounts/Audit cadres andlater on all such up-graded posts be re-

designated after considering the job structure in

other departments in view of its suitability and

practicability.

ii. To facilitate the implementation of

recommendations at 13(i)(a) or 13(i)(b), promotion

quota may be reviewed and necessary amendments

be processed in NHA Service Rules.


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19.14. Other posts upgraded by Executive Board. In addition to

upgradation of the NHA employees serving on audit, accounts, and

budget posts, the NHA Executive Board in the past has upgraded

various posts, such as those of Computer Operator (209th Meeting)

P.S., Stenographer, Stenotypist (212th Meeting), Cameraman (193rd

Meeting), Librarian, Draughtsman (210th Meeting), Generator/AC

Plant Operator, Telephone Operator, Khateeb (111th Meeting),

Qanoongo and Patwari (208th Meeting), from their original pay scales

to revised higher pay scales. These upgradations have also been done

in purported exercise of NHA Executive Board’s powers under Rule

2(1)(b) and Rule 3 of the NHA Service Rules 1995.

19.15. Applicable Law. Employment in NHA is governed by

Section 13 and 14 of the NHA Act, NHA Service Rules 1995, and NHA

(Appointment and Promotion) Rules 1995. Additionally, certain

provisions of ESTA Code and Section 21 of the General Clauses Act

are also applicable to the current scenario.

19.16. Powers of NHA Executive Board. Under the NHA Service

Rules, and the NHA (Appointment and Promotion) Rules 1995, NHA

Executive Board has been defined as the ‘Competent Authority’. The

NHA Executive Board is thus competent to create or abolish posts;

however the appointment and promotions of employees, and other

conditions applicable to employees must be in accordance with the

Schedules of the NHA (Appointment and Promotion) Rules 1995. ESTA

Code defines ‘upgradation’ as “abolition of the existing post and

creation of a new post higher grade ”. Furthermore, under the Rules,

financial benefits cannot be accorded without the prior concurrence of

the Finance Division. Schedule IV of the NHA (Appointment andPromotion) Rules 1995 sets out, amongst other things, for the

purposes of appointment etc., designation of posts in NHA against the

basic pay-scale in which that posts has been sanctioned in the NHA’s

service structure, for posts in BS 1 – 20. Since the Rules are framed

by the Federal Government under Section 31 of the NHA Act, NHA’s

Executive Board is not empowered to act in derogation of the Rules

and to upgrade a post, since the effect would be to create a post and

appoint a person on it, in derogation of the approved scale of that post

contained exhaustively in the Schedule. Furthermore, NHA’s


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Executive Board is not empowered to take a decision on its own that

accords financial benefits to employees without prior concurrence of

the Finance Division.

19.17. Effect of court cases/decisions. The decision of the

aforementioned judgment of the Supreme Court was not applicable to

NHA as it was not directed in any manner whatsoever to NHA.

Furthermore, in all previous cases, NHA has been asked by the FST,

or the High Courts, to consider the requests/applications of

employees, to decide the same, or to take a decision to remove the

disparity that has been created amongst NHA employees by selectively

upgrading the posts of certain employees working in accounts/

budget/audit posts. Otherwise, no court order has directed or ordered

the NHA to upgrade some or all employees, and similarly, no court

order or decision has found NHA’s Service Rules to be in derogation of

the Constitution, or any other law. However, the selective upgradation

of certain employees, besides being in violation of the NHA Service

laws, also creates discrimination against the remaining employees,

which is prima facie unconstitutional.

19.18. Can the Executive Board revoke its earlier decision? NHA

has sought legal opinion on the matter. It has been advised that is

settled law that the authority which has taken a decision, has also the

power to change or amend that decision. The decision of the Supreme

Court in the case of The Engineer-in Chief v. Jalaluddin PLD 1992 SC

207, on a similar issue is emphatic on this point. The relevant part of

the judgment is reproduced herein, which is self-explanatory.

19.19. Additionally, under section 21 of the General Clauses Act,

the authority which can pass an order it entitled to vary, amend, add to or to rescind that order. The order under which the payment was made

to the respondent had no sanction of law. Locus poenitentiae is the

power of receding till a decisive step is taken. But it is not a principle of

law that order once passed becomes irrevocable and it is a past and

closed transaction. If the order is illegal then perpetual rights cannot be

gained on the basis of an illegal order. The appellants when came to

know that on the basis of incorrect letter the respondent was granted

Grade-11, they withdrew the said letter. The principle of locus

poenitentiae would not apply in this case.


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19.20. It has more recently been held by the Supreme Court in

Executive District Officer (Edu) v. Rizwana Kausar 2001 SCMR 1581 by

Mr. Justice Tassaduq Hussain Jillani that “There is no cavil with the

proposition that the principle of locus poenitentiae would arise in a

situation when some benefit was awarded to a person against declared

law…”. Thus, the NHA has received legal advice that since the earlier

upgradations were in violation of the NHA (Appointment and

Promotion) Rules 1995, as well as the NHA Service Rules 1995, the

same have created no permanent legal rights, and under Section 21 of

the General Clauses Act, the Executive Board is fully empowered to

withdraw/revoke the orders of upgradation, which will simultaneously

put to an end any disparity in pay or discrimination in service

structure within the service cadre of NHA, and all NHA employees will

be thereafter on equal footing, and in service according to the

applicable law.

Board Deliberations

19.21. The Board deliberated on the matter in light of the

presentation made before the Board.

19.22. The VP-NESPAK viewed that the draft minutes be

reworded. The Chairman instructed Member (Admn) to revisit the

draft and finalize as per discussion in the Board meeting.

19.23. The Chief (T&C) did not agree with the proposal and

viewed that it is a serious issue for the Board that at one time NHA is

coming with the proposal that the recommendations are as per rules,

procedures, whereas, after lapse of years, the Board is approached torevoke its earlier decision(s) being against the rules. He suggested that

NHA should first conduct facts findings proceedings of the matter to

fix responsibility against the concerned persons. The Executive Board

may also keep in mind the legal aspects and litigations to be faced by

NHA in case of reversion / withdrawal of upgradations. He finally

opined that the Board may defer the item till facts findings

proceedings are completed and responsibilities are fixed for getting

approvals in earlier meetings for upgradations of posts in different

cadres.


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Decision

19.24. The Executive Board decided that since the past

upgradations of certain posts was not in conformity with NHA Service

Rules 1995 and the NHA (Appointment and Promotion) Rules 1995, all

such upgradations being against the rules were rescinded ab initio,

and all posts in NHA that were so upgraded, along with their

incumbents, will immediately revert to their designated pay-scales as

per Schedule IV of the NHA (Appointment and Promotion) Rules 1995.

The Executive Board further decided that a committee should be set

up by the Chairman to look into the issue, and to submit a proposal

to the Executive Board for the benefit of all NHA employees

Action By : Member (Admn)

20. Additional Agenda Item-III

PC-I for Land Acquisition, Affected Properties

Compensation & Relocation of Utilities for

Construction of Approach Roads/Road Network for

New Islamabad International Airport, Islamabad (NIIA,

formerly NBBIA)

Proposal

20.1. The Executive Board is requested to recommend the PC-I

for Land Acquisition, Affected Properties Compensation & Relocation

of Utilities for Construction of Approach Roads/Road Network for New

Islamabad International Airport, Islamabad (NIIA, formerly NBBIA) at

a cost of Rs 13,830 million for approval of CDWP and ECNEC.

Deliberation

20.2. The Member (Planning) briefed the Board. The Chairman

further added that the alignment of the project has been changed after

visit of the Prime Minister and the current alignment proposed herein

is deliberated upon in detail.


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20.3. The Chief (T&C) observed that it will be a revised project

therefore, fulfillment of all codal / procedural formalities be ensured.

20.4. The Board deliberated and agreed with the proposal.

Decision

20.5. The Executive Board cleared the PC-I for Land

Acquisition, Affected Properties Compensation & Relocation of Utilities

for Construction of Approach Roads/Road Network for New Islamabad

International Airport, Islamabad (NIIA, formerly NBBIA) at a cost of Rs

13,830 million for onward submission to CDWP and ECNEC for

subsequent approval.


21. Conclusion

21.1. The Chairman wrapped up the meeting by thanking the

Board Members for their active participation and useful input.

-----------------------


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EXTRACTS

DRAFT MINUTES OF THE

234th EXECUTIVE BOARD MEETING

APRIL 22, 2014 AT ISLAMABAD

234 executive board meeting of nha

Documents