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  • Sep 2nd, 2006
  • Comments Off on Joint venture with Italian firm to set up sleeper plant
A joint venture of a Pakistani firm, 'HIS', and an Italian company, 'PLAN', will set up a sleeper manufacturing plant, adjacent to the existing infrastructure of concrete sleeper factory in Kotri (Sindh), sources in Railways Ministry told Business Recorder.

The Economic Co-ordination Committee (ECC) of the Cabinet in its last meeting had cleared the proposal to lease out one of the concrete sleeper factories of Pakistan Railways to the joint venture. Sources said that the joint venture, lowest successful bidder, had refused to take the existing concrete sleeper factory at Kotri, saying that the plant and manufacturing techniques followed by Railways were old and obsolescent.

However, after discussion with Railways officials, it was willing to take over the manufacture of twin-block sleepers in the factory, in addition to setting up a new plant at rates at which Railways is currently producing sleepers, sources added.

Under the proposed agreement, HIS would undertake the following:

i) Provide mono-block concrete sleepers to Pakistan Railways at Rs 1900 per sleeper, against Railways own cost of Rs 1845, and long ties at Rs 1700 per meter, not manufactured locally in the past. The sleepers provided by the lessee would, however, involve the use of low relaxation high tensile steel, rapid hardening cement and admixture during the grouting process to add strength and durability to the sleepers, which Pakistan Railways is not using at present. The cost includes a return of 10 percent, and 3.5 percent income tax payable by the lessee.

ii) Pay Rs 3.60 million annually as lease amount to Pakistan Railways for the property leased.

iii) Manufacture and supply of twin-block sleepers at Rs 1525 per sleepers, against Railways own cost of Rs 1537, through an agreement till such time as the existing plant and equipment remain functional.

iv) Improve the quality of sleepers by using low relaxation high tensile steel and adding admixture etc which are presently not being used by Railways.

v) Meet the Pakistan Railways annual requirement of a minimum of 200,000 concrete sleepers and other allied concrete sleeper products with the permission to manufacture any other products for the private sector. Additional orders may be provided through mutual consultation.

vi) Allow escalation in prices at 6.5 percent per annum on base price.

vii) In case of any dispute with the contractor, the matter would be referred to the arbitrator as per arbitration clause to be inserted in the agreement.

viii) The contractor will deposit bank guarantee for 2 percent of total cost as earnest money.

ix) The quality of sleepers would be tested by outside agencies.

Sources said that since Pakistan Railways is experimenting by offering concrete sleeper factory to private sector for the first time, the Ministry considered it appropriate to evaluate the performance of the product of one sleeper factory, at Kotri, for the time being.

Based upon performance, other concrete sleeper factory at Kohat would be leased in two years with HIS Industries being given the first right of refusal, sources added.

Copyright Business Recorder, 2006


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