ISLAMABAD - The Capital Development Authority is planning to get financed its part of Rs 1.6 billion, 25 per cent of the total Rs 6.5 billion project of installation of light emitting diode (LED) lights across the federal capital, from the federal government by taking expensive Cash Development Loan (CDL) from it.
TheNation has learnt reliably that the civic agency for the first time since its establishment on June 14, 1960 will go to avail the option of Cash Development Loan (CDL) from the federal government to launch lights project. Mainly the provinces obtain Cash Development Loans to finance the annual development programme of the province in view of the shortfall in federal transfers, informed an official of Finance Ministry when asked the nature and terms and conditions of such loan.
He said high interest rate is charged on CDL. “Whatsoever the interest rate Finance Ministry will charge against the loan but it will never be less than 15-18 percent,” he added.
The official further informed that provinces are paying as high as 17 to 18 per cent interest rate on cash development loans. However, the modalities that how CDA would retire this expensive loan carrying high interest rate are yet to be settled.
In a recently held CDA Board meeting a committee, comprising of Member Finance, Member Planning and Member Engineering, has been asked to compile, once again, a detailed report on Rs6.5 billion project and present it to CDA Board at earliest. The Capital Development Authority has reinitiated the whole process of launching LED lights project after Asian Development Bank on January 4, 2012 officially informed CDA and Ministry of Water and Power that the bank was not going to fund the project on the grounds that CDA had not adhered to transparent procedure and procurement guidelines while initiating the project.
ADB has further stated that CDA had not done the bidding process for the Rs6.5 billion project in line with the standard bidding process defined by ADB for a funded project.
ADB was supposed to provide soft loan amounting to Rs4.9 billion, 75 percent of the total cost of the project to CDA. Now upon bank’s refusal a firm, Oslo, to whom the project was awarded by CDA, has shown its interest to provide loan on its own terms and conditions.
“The CDA even don’t have funds amounting to Rs1.6 billion, 25 percent of the Rs6.5 billion LED lights project, required to initiate the project. Now, Planning Commission has suggested us to take Cash Development Loan from the federal government,” Chairman CDA Engineer Farkhand Iqbal said while talking to The Nation.
He said Authority would consult Finance Ministry in upcoming days to formally initiate the process of getting loan. However, he said, he was not exactly aware of the interest rate the federal government would charge on the loan amount.
Responding to another question, Farkhand Iqbal said, the firm Oslo has shown its interest to provide loan amounting to Rs4.9 billion to CDA to launch the project, while authority would take another loan from federal government to pay its part of Rs1.6 billion.
An official of Finance Ministry while talking to The Nation said so far the ministry has not received any request/summary from CDA in this regard so far.
He said the ministry would take final decision in this regard after weighing the merits and demerits of the project.
Data available with TheNation shows that currently there are 65,953 public lights installed on 40,868 poles and walls in Islamabad. The breakup of lights and poles installed are 15218 garden poles-straight and 13200 single arm poles with one light installed on each pole, 9768 double arm poles with two lights installed on each pole, 2467 high mast poles with four lights installed on each pole, 215 star poles with five lights installed on each pole, 150 spot lights and 6838 additional lights. The energy requirement to light up these lights is 69,051 MWh while there are additional line losses 10 percent of 69051 MWh.