Government set to engage international consultant for up-gradation of Mainline-1 (ML-1) under CPEC

ISLAMABAD: The government has decided to engage international consultant for the preparation of governance, human resource structures, development of business and cash flow models for up-graded Main Line (ML-1) project under the China-Pakistan Economic Corridor (CPEC).

The Central Development Working Party (CDWP) has recommended $7.2 billion ML-1 railway project to the Executive Committee of the National Economic Council (ECNEC) for further approval, and Railways Ministry is planning to execute physical work in January 2021.

The ministry is in process of hiring of consultants to frame terms of reference (ToRs) to engage consultant for the preparation of governance, human resource structures and development of business and cash flow models for upgraded ML-1.

The date of submission of Request for Proposal (RFP), which was fixed on 3rd June, 2020, has been extended up to 10th June, 2020.

The ML-1 has been picked up for up-gradation as an Early Harvest Project under the CPEC arrangement.

The whole project envisages the up-gradation of ML-1, establishment of a dry port near Havelian Railway Station; up-gradation of Pakistan Railway Academy Walton, Lahore; and passenger facilities improvement at important railway stations.

The project will require a new system of governance and fully equipped human resource to get the intended benefits and ensure the repayment of foreign loan.

According to documents, the prime objective of this consultancy service is to prepare TORs along with RFP to engage a national/international consultant for the organisational and human resource structures, and all other aspects related to the successful management of ML-1.

The TORs to be prepared by the consultant shall cover two phases: Phase-I detailed TORs for preparation of governance and HR structures, development of business and cash flow and other models for upgraded ML-1. Phase-II detailed TORs for implementation of various structures and models prepared by the management consultant.

The TORs should also identify areas to be discovered by the management consultant to improve the operational efficiency and the management through an enhanced organisation structure.

The consultant will be required to prepare a governance structure for ML-1 with a view to separate it from the rest of PR network to transform ML-1 into a competitive, profitable, self-sustainable entity.

It should have defined the complete hierarchy along with roles, responsibilities and authorities of each tier and stipulate a strategy for the communication channels and interfaces with its clients covering all risks.

Proposed TORs must ensure to conduct an HR Systems Audit to analyse the gap in existing and required HRM policies, practices and procedures and design customized policies for ML-1 in line with international best practices.

This may include a study of the recruitment and selection process, performance appraisal/management system, training and development practice and compensation system and strategy by the management consultant.

The TORs should also seek comprehensive HR policies and procedures covering recruitment and selection, trainings, performance management system, career planning, compensation, disciplinary rules and employee well-being.

The TORs must ensure to conduct capability analysis of existing HR resources and indicate specialised trainings required to enhance their capabilities to adjust into the upgraded ML-1 or identify recruitment needs for additional staff under new governance system.

The TORs will also cover transparent and result-based performance management system, which could ensure assessment of achievements through an elaborative and integrated system of key performance indicators (KPIs).

Proposed TORs must cover the study of existing financial model/analysis, which is an integral part of updated PC-1 and point out deficiencies along-with workable suggestions for their rectification by analysing the current and future passenger and freight markets.

The projected growth of freight and passenger businesses should be backed by reliable resources, verifiable data, previous studies (if any) and nationally/internationally accepted models/calculations.

The TORs should also emphasize upon study of operating cost incurred by PR and build projections for ML-1 based on verifiable factors including but not limited to consumption of oil and lubricants as per projected operation’s volume, projections of global oil prices, labour requirements as per new system, wage rates and maintenance costs associated with the new system.

The management consultant will be required to develop a detailed financial model by calculating the NPV, IRR and payback period based on capital cost and incorporating Track Access Regime as the main instrument of business under enhanced capacity.

The TORs will also address the need of sensitivity analysis on the major parameters including but not limited to price of tickets, freight/passenger traffic, fuel escalation, impact on debt repayment due to exchange rate fluctuation, and any other factors deemed necessary for best-in-class appraisal of railway projects.

The TORs are required to cover increased business volume at ML-1 after up-gradation.

The role of management consultant may include but not limited to identify different “Business Models” for revenue generation like public-private partnership, commercial management outsourcing and track access regime etc. and analyse pros and cons of these models.

How these models can be run successfully by formulating passenger, freight and non-fare revenue strategies should also be made part of these TORs.

Identification of costs, mechanisms and policy requirements for implementation of suggested models will also be the part of the exercise.

After up-gradation of ML-1, line capacity will increase many folds providing additional room for inviting private sector to run passenger and freight trains under Track Access Regime.

Proposed TORs should include a comprehensive private sector engagement model to fully utilise this increased line capacity by identifying private sponsors for investment in both passenger and freight sectors such as provision of new fleet for both passenger and freight, handling operation at freight terminals and door-to-door service of freight operation.