PDA seeks KP government approval for reallocation of a €18.42 million BRT loan

The Peshawar Development Authority (PDA) has sought the provincial government’s approval for the reallocation of the Peshawar Bus Rapid Transit project’s €18.42 million (Rs5.54 billion) foreign loan to the remaining civil works of the mass transit system.

The provincial capital’s civic agency recently put up a summary for the loan’s reallocation to the chief minister’s office for approval, which, according to officials, is likely to come in a few days.

They told Dawn that stakeholders, including the provincial government, contractors and donors, reached a consensus about the utilization of the unused portion of the loan, which was granted by France’s public financial institution, Agence Francaise de Developpement, for BRT civic works after negotiations spanning over two weeks.

“The AFD will reallocate an amount of €18.642 million remaining undisbursed as of December 13, 2023, on account of de-scoped and remedial works, joint venture contractors’ retention money, unpaid claims and dispute board awards under the civil works category to operations and transfer it to TransPeshawar.”

It added that efforts would be made to engage contractors on the basis of the Pakistan Engineering Council “formula” and contract extension and that in case the PDA and contractors failed to renew the unfinished contracts, the civic agency would “execute the remaining contracts to be awarded as per the KP Public Procurement Authority’s rules, which might have an additional financial impact on the contract price and PC-I.”

The summary also said the funds amounting to €18.642 million meant for civil works included in the operations through re-categorization by the Asian Development Bank and being transferred to the TransPeshawar would be utilised by the PDA for the execution of the remaining works.

It added that TransPeshawar would receive those funds from the AFD before transferring them to the account of the PDA.

The Peshawar BRT project was initiated with the help of a $335 million loan from the ADB and €130 million from the AFD.

The documents reveal that the original loan agreement provided for the closure of the ADB funding stream on December 31, 2021, and for the AFD loan on December 31, 2022. However, both loans were granted a yearlong extension.

The documents show that while the ADB loan has been fully utilised, the AFD’s money, which was slated for closure on December 31, 2023, had an undisbursed portion of €19.53 million in respect of civil works and consultants.

“The undisbursed portion of the AFD loan comprises a mix of work done by the contractors but not yet paid, retention money withheld from the contractors paid bills and remaining work still to be done by the contractors,” read the PDA’s summary.

Last month, both ADB and AFD informed the provincial government that if payment requests for the undisbursed amount were not made by all stakeholders by December 11, the remaining loan amount of €19.530 million would be cancelled and the government would have to arrange payments for those liabilities from its own sources.”

As the caretaker chief minister directed authorities to make all-out efforts to complete work on the BRT project at the earliest and hand over three malls to the TransPeshawar, the government decided to approach lenders to extend the loan or any other possible mechanism to disburse the remaining loan funds, according to officials.

They told Dawn that a joint mission of the ADB and AFD visited the provincial capital at the start of the current month, met all stakeholders, and discussed with them options for protecting the undisbursed loan through extension or other means, as well as solutions to the contentious issues, including litigation.