By By Qadeer Tanoli
Federal Finance Minister Shaukat Tarin has removed the final stumbling block in the release of Rs300 million for the Shaheed Benazir Bhutto CNG Bus Project by extending the anticipatory approval of the Executive Committee of the National Economic Council (ECNEC), The News has learnt.
Sources told The News that a summary had been initiated on October 29 by the federal environment secretary for anticipatory approval of the ECNEC. Following Tarin’s approval, the Energy Conservation Centre (ENERCON), Ministry of Environment, is all set to release the Rs300 million for the current financial year to facilitate the implementation of the Karachi CNG Bus Project.
Despite directions issued by President Asif Ali Zardari for the induction of 500 CNG dedicated buses by December 2009, lengthy procedural formalities had delayed the project. The bureaucratic red-tapism included the approval of the revised project cost (PC)-1 by Central Development Working Party (CDWP) and subsequent endorsement by the ECNEC. The ministry of environment, at the behest of the ministry of finance, had opted to obtain anticipatory approval of ECNEC for the implementation of the project on a fast-track basis.
The pledged amount for the project would be available within one week, sources said, with funds first being transferred to the State Bank of Pakistan (SBP). Out of the Rs300 million made available, Rs280.75 million would be transferred to the SBP, which in turn would release funds to operators through notified banks.
Sources added that Rs19.25 million would be given to the Karachi Mass Transit Cell (KMTC) of City District Government Karachi (CDGK) to establish the Project Implementation Monitoring Unit (PIMU). The PMIU would be responsible for the establishment of expenses, and would also conduct research regarding these buses. The unit would have a 16 member skeleton staff which would be led by a project director.
Revealing details of the project, sources told The News that a Rs2.5 billion subsidy was approved by the federal government exclusively for Karachi for the procurement of 4,000 CNG buses over a five-year period. The new dedicated CNG buses shall also be exempted from 15 per cent import duty. Sources also told The News that 40 CNG green routes had already been identified for the new buses in Karachi.
As per the project modalities, sources said, bus investors may apply for a minimum fleet of 25 buses, with a maximum debt-to-equity ratio fixed at 80:20. The federal government will contribute a total of Rs677,181 as subsidy over five years toward the cost of the one bus; Rs300,000 will be provided as upfront grant as part of down payment, and Rs377,181 as interest subsidy which would be payable over five years.
The Shaheed Benazir Bhutto CNG Bus Project has acquired much significance because if it is completed successfully, the project would be replicated in nine other cities of the country.