LAHORE: To address the pending arbitration disputes related to the Lahore Orange Line Metro Train Project, a high-level committee led by the chief secretary has been established.
As per the details, the major contractor involved in the project has agreed to forgo the entire markup amount, valued at billions, and provide other concessions to the government.
The committee, consisting of the Planning & Development Department chairman, the Finance and Law department secretaries, and the Lahore Development Authority (LDA) director general, has been tasked with evaluating the legal, technical, and financial aspects of the contractor’s consent.
As per the working paper presented in a recent meeting of the LDA’s governing body, the LDA had entered into a contract with the contractor for the Lahore Orange Line Metro Train Project (Package-I) on September 5, 2015.
The stipulated completion time was 10 months. However, work at various sites was halted in January 2016 due to a stay order from the Lahore High Court.
Moreover, the work on specific stretches resumed after a 20-month hiatus when the Supreme Court vacated the stay order in December 2017.
As part of the contract clauses, the contractor initiated a total of six disputes through the court and arbitration tribunal.
In the meantime, the apex court’s human rights cell directed the contractor to expedite the completion of the metro train project.
Subsequently, on January 3, 2019, the court ordered the LDA to pay Rs. 645 million to the contractor against the bank guarantee and emphasized resolving all disputes through the prescribed mechanism outlined in the contract agreement.
Following the court’s orders, the arbitration proceedings were concluded, and awards were announced for the six dispute resolution claims.
Later, on April 3, 2023, the contractor approached the LDA seeking an amicable settlement for the awarded claims in six disputes.
Moreover, multiple meetings were held with all stakeholders to discuss the contractor’s offer for a peaceful resolution.
Under this offer, the contractor expressed a willingness to waive off markup amounting to Rs. 3.39 billion and Rs. 1.29 billion in four claim disputes.
Additionally, two claims (No 2 and 3) would be withdrawn. However, both parties agreed to contest the principal amount of dispute-1 in the civil court, where the specific matter is pending.
As part of the settlement, the LDA will be required to release the bank guarantee amounting to over Rs. 645 million after the amicable settlement is signed.
Following the settlement, the government will need to pay Rs. 856 million for the retention money against an irrevocable bank guarantee and Rs. 798 million for the total claims to the contractor.
After thorough discussions, the governing body decided to form the committee, led by the chief secretary, to make a decision and provide recommendations for final approval of the settlement in the next governing meeting.
Source: DAWN
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