ISLAMABAD, July 20: The National Logistics Cell (NLC) has emerged as a key player in railways’ operations thanks to the mismanagement and huge losses by the Pakistan Railways.

After entering into a Rs500 million deal with the Pakistan Railways to refurbish its 30 locomotives early this year, the NLC on Friday reached a $11.11 million agreement with the Korean Rail (Korail) to purchase 10 refurbished (GMU-30 Model) locomotives for its freight business. The NLC is expected to purchase in two years another 36 locomotives.

NLC Director of Generation Maj-Gen Junaid Rehmat and Korail’s Vice President Paeng Jung-Goang signed the agreement here in presence of Finance Minister Dr Abdul Hafeez Shaikh and Quarter Master General and officer in charge of NLC Lt-Gen Sajjad Ghani.

An official statement said the NLC and Korail had been negotiating for the sale-purchase deal of refurbished GMU-30 locomotives since October 2010.

Under the agreement, Korail will provide the type of locomotives already held on inventory of the Pakistan Railways, except for different gauge i.e. Standard vs Broad gauge. It will overhaul these locomotives and change their gauge to suit to PR tracks’ requirement. Spare parts for two years maintenance are also being procured, the statement said.

The locomotives will be delivered in Karachi in 10 months of opening of letter of credit. Twenty per cent of the payment would be made in advance while the remaining 80 per cent on delivery of locomotives through the L/C.

As part of the agreement, Korail will depute a maintenance and supervisory consultancy team comprising five engineers for two years at an additional cost of $1.4 million. The locomotives will have a two-year warranty for which the NLC will establish its workshop facilities in coordination with Pakistan Railways for maintenance of these locomotives.

The Korean firm will hand over the locomotives after a test run covering 1,250km between Karachi and Lahore and will provide performance warranty bond for 5 per cent of the contract price.

Korail will be phasing out 46 locomotives next year and NLC intends to acquire more locomotives from the firm. An official said the NLC was in the process of strengthening its freight operations, especially for goods in transit for Afghanistan as well as inland freight operations.