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Probe against CAA begins: Rs 1.5 billion spent to buy land for new Gwadar airport

ISLAMABAD (April 27 2009): The Planning Commission is understood to have started investigation against Civil Aviation Authority (CAA) for spending Rs 1.5 billion to purchase land for the proposed new Gwadar International Airport without taking the federal government into confidence, official sources told Business Recorder.

They said that the inquiry has been ordered by the Executive Committee of National Economic Council (Ecnec) in its meeting on March 30, 2009. The meeting was presided over by the Advisor to Prime Minister on Finance, Shaukat Tarin. Sources said that the Advisor was shocked to hear that the executing agency did not bother to seek even anticipatory approval for the expenditure.

In 2007, the government had decided to review the specifications of the proposed airport to make it cost-effective, and also to resolve the controversy over the cost of land between the Defence Ministry and Balochistan government, sources said.

They said that when the issue was placed before the Ecnec, it was pointed out that the executing agency had spent Rs 1.5 billion without approval of Ecnec, and even anticipatory approval was also not obtained. ” The case was presented to the Ecnec after a lapse of three years, which the Advisor observed was regrettable,” sources added.

After detailed discussion, sources said, the Ecnec decided that the Planning Commission should probe all aspects of the case and submit its recommendations in the next Ecnec meeting. The sources said that Gwadar international airport project had been deliberated threadbare by the Economic Co-ordination Committee (ECC) of the Cabinet on February 26, 2007, which had asked the Planning Commission Deputy Chairman Dr Akram Sheikh to discuss the matter with Balochistan Governor for acquisition of 6,500 acres land for the project and submit report to Prime Minister Shaukat Aziz.

According to sources, the ECC had approved some changes in the ‘Memorandum of Understanding’ (MoU), especially the shortening of the taxiway and withdrawal of provisions for Airbus (A-380) flights. However, provision of these flights were to be included in the future plan.

Sources said that former Deputy Chairman, Planning Commission, had been asked to revise the parameters of the airport, relating to apron area and other facilities, to make the project cost-effective. “No provision was to be made at that stage for Airbus (A 380), and a modular approach was to be adopted whereas space would be earmarked for future expansion,” they said. Defence Ministry had earlier submitted a summary to the ECC, seeking approval for awarding the airport project on turnkey basis to China Harbour Engineering Company (CHEC). However, the ECC had given certain guidelines and directed to re-examine the proposal for submission of updated summary to the ECC.

In 2007, the matter was placed before the Ecnec, which approved the PC-1 for land acquisition for the airport with the direction that no increase in the price of land and no re-alignment of coastal road should be undertaken, and the issue hindering the implementation of the project should be resolved by the Chief Minister and Chief Secretary of Balochistan.

According to sources, Defence Ministry’s representative explained that the MoU had been revised in consultation with the Law Division to incorporate safety/exit clauses.

The revised MoU was signed by the CAA and CHEC on January 20, 2007, sources said. It was also explained to the ECC that performance guarantee from ‘A’ rated bank would be included in the formal contract to be signed with the company.

Sources said that the CAA was processing the project on modern lines, and a sum of Rs 1050 million was allocated in PSDP 2005-06 for acquisition of land at Rs 157,000 per acre, which amount had already been released in favour of Military Estate Officer, Quetta.

However, the acquisition of land was delayed as the Balochistan government unilaterally increased the cost of land from Rs 157,000 to Rs 350,000 per acre, besides reducing the area from 5600 acres to 4137 acres.

Source: Business Recorder

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