ISLAMABAD : The Federal Government has constituted seven member Committee to negotiate the terms and conditions of the commercial agreement with UAE based on the price discovery mechanism for construction of Dedicated Freight Corridor at KPT.
According to sources, Cabinet Committee on Cabinet Committee on Inter-Governmental Commercial Transactions (CCIGCT) was informed that the Prime Minister’s Office forwarded a draft Inter-Governmental Framework Agreement proposed to be signed between Government of Dubai and Government of of Pakistan for the investment and construction of Dedicated Freight Corridor (KPT-Pipri) including a Multi-modal logistics Park (MMLP), development of rail freight terminals on Pakistan Railways network and other areas of mutual interest in railway sector.
The Framework Agreement non-binding in nature, broadly aimed to promote cooperation between the nominated entities of two countries in line with the modalities agreed between the two parties.
It was apprised that the draft Framework Agreement was shared with relevant stakeholders for input and Law Division for legal vetting. Law and Justice Division vetted the Framework Agreement from legal point of view, Foreign Affairs conveyed no objection from political point of view and verified that DP World (nominated entity) is a Government of Dubai entity.
Section-3 of the Inter-Governmental Commercial Transactions Act, 2022 provides that “The Federal Government may enter into a G2G agreement with the government of a foreign state for the purposes of this Act which shall include broad parameters and mechanism for execution of intended commercial transaction and be negotiated and executed between the nominated entities of the Federal Government and government of the foreign state. In terms of rule-16(1)(h) of the Rules of Business 1973, all proposals for signing of negotiated instruments with foreign countries and approval for ratification of the instruments require approval of the Cabinet.
Approval of the Cabinet was accordingly solicited for the Inter-Governmental Framework Agreement, as well its authorization to respective Minister In-charge for signing of the same, and nomination of Ministry of Railways as the entity for entering into commercial agreement with the DP World, the nominated entity of the Government of Dubai subject to Section 4 of the Inter-Governmental Commercial Transactions Act 2022.
The Cabinet, in its decision of January 11, 2024 had approved this proposal through circulation. The Minister for Railways and Chairman of Ports, Customs and Free Zone Corporation, Government of Dubai had signed the Framework Agreement on January 18, 2024. Ministry of Railways has suggested certain parameters as the basis/yardstick for the price discovery on the project of Dedicated Freight Corridor (KPT-Pipri) including a Multi-Modal Logistics Park (MMLP).
The variables and parameters of price discovery mechanism will be as follows ;(i) Terms of Agreement offered by DP World ;(ii) conceptual framework of the project ;(iii) Mode of Partnership (PPP) ;(iv) Mode of Concession ;(v) Foreign Direct Investment (FDI) ;(vi) timeframe for driving FDI;(vii) multi-modal logistic arrangements;(viii) valuation of land and infrastructure developed thereon;(ix) premium based on further related use of land;(x) start and completion time of development ;(xi) compliance of local laws ;(xii) upfront payment;(xii) determining the profit sharing mechanism/modality/formula ; and( xiv) any other related parameter.
Ministry of Railways further informed that the clause (a) and (b) of sub-section (2) of Section 4 of the Inter-Governmental Commercial Transactions Act 2022 states that the Cabinet Committee on Inter-Governmental Commercial (CCIGCT) may like to: (i) authorize Pakistan Railways (the nominated entity of Government of Pakistan) to negotiate commercial terms with the M/s Dubai Ports World (DP World) (the nominated entity of the Government of Dubai) as per the signed Framework Agreement and ; (ii) approve price discovery mechanism based on parameters/variable.
The CCIGCT also constituted the following Negotiation Committee to negotiate the terms and conditions of the commercial agreement based on the price discovery mechanism and place its recommendations in the next meeting of CCIGCT for consideration and approval, Minister for Railways, Secretary Ministry of Maritime Affairs, Secretary Law and Justice Division, Secretary Board of Investment, Secretary Finance Division., Secretary Foreign Affairs Division, Chief Executive Officer/Senior General Manager, Pakistan Railways, Additional General Manager / Infrastructure, Pakistan Railways Any other member co-opted by the Committee.
After briefing by Ministry of Railways, the proposals were deliberated at length especially the constitution of the negotiation committee and factors for arriving at a fair price discovery mechanism. The CCIGCT approved the Committee for negotiation with UAE including Chairman KPT.
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