KARACHI, Oct 4: The foreign investment of about $200 million that was supposed to finance the city government’s IT Tower is not coming and now the project will be funded by the CDGK itself.

Sources told Dawn that earlier the Malaysian conglomerate – comprising IJM Astra Netcom (UAE) and Maldak (UAE) etc – had signed an agreement with the CDGK in July 2006 under which the project was given on a build-operate-and-transfer basis and the CDGK only had to give its land.

The multinational company was to bring in around $200 million to construct the high-rise building and manage it for 35 years to get its investment back as well as earn a profit on it also. The building was to be handed over to the CDGK after the expiry of the contract period.

The sources said that soon after the agreement signing the multinational company, owing to the political situation as well as economic instability in the country, did not feel comfortable with bringing in the investment of $200 million. Besides, one of the partners of the multinational company was an Indian and the security agencies were also not feeling comfortable with that fact and had raised their concerns, they added. So keeping these facts in view a new agreement had been made, with changed terms and conditions, with the Malaysian company, minus its Indian partner, and now funding would be provided by the CDGK while the Malaysian company would act just like a contractor and build the 47-storey building next to the Civic Centre on University Road in Gulshan-i-Iqbal.

The sources said that while under the new agreement the risk factor of the Malaysian company had been eliminated, the CDGK was claiming that the new agreement was more beneficial to the CDGK as it would get the building instantly after its completion and not after 35 years and would earn more than it would have through the earlier arrangement.

They said the new agreement was signed between the Karachi Development Company (employer) having its office at the Civic Centre and the IM Technologies Pak Pvt, having its office at the China Ground, Kashmir Road (contractor).

The new agreement says that the BOT was later changed in view of more beneficial gains to the CDGK if the project is financed by the CDGK through the project revenues and it is owned and operated by itself instead of giving it to the multinational company for 35 years and the contractor’s role was reduced to designing, constructing and supervising the project in continuation of the Phase I agreement. The contract price for designing, constructing, finishing the project building, except tiling floors, walls, false ceiling etc offices, hotel, call centres is $197 million — government fees are in addition.

The sources said that a $197 million revolving letter of credit (LC) was to be given to the contractor on the signing of the agreement. Work would not begin unless LC facility had been provided to the contractor.

They said the agreement said that this was the fundamental term and failure to provide the LC in time set out shall entitle the contractor to terminate the contract.

Any delay by the contractor in issuing a notice of termination pursuant to this provision shall not be a waiver of the contractor’s right to terminate which shall continue until the document has been furnished by the employer and is accepted by the contractor, says the agreement.

The sources said that the agreement was signed in Kuala Lumpur for the Karachi Development Company by Nazim Syed Mustafa Kamal; DCO Javed Hanif Khan; and for IM Technologies by Sarfaraz Rizvi (US citizen), Dato Goh Chye Koon (Malaysian ID Card No: 490629–08–5463) and was attested by notary public Mansheel Kaur of Selangor, Malaysia.

When Dawn approached Karachi Nazim Mustafa Kamal about the IT Tower story sometime back, he repeatedly said that the multinational company was bringing in $200 million foreign investment, and he categorically denied that the CDGK was to raise the funds and the multinational company was only a contractor hired to build the building. When requested for a copy of the agreement(s), he agreed and directed his staff to provide the copy. The official concerned, executive district officer of the Enterprise and Investment Promotion department Shahab Imam, despite repeated requests did not give the copy, saying the DCO had directed him not to give out a copy of the agreement. However, he showed the agreement to this reporter suggesting that notes could be taken.

The nazim had also said that work on the IT Tower project was going on, but responding to Dawn’s queries, the Karachi Building Control Authority’s official concerned said the building plans of the IT Tower had not yet been approved and that work had not yet started on it. Though on site heavy-duty cranes, excavators and other earth-moving machinery had been deployed and from 30 to 40 feet deep pit (that probably would serve as the basement when the building was complete) had been dug up. The Malaysian multinational company has also encroached on about a 50-foot wide adjoining road, which separates the IT Tower plot from the Gulshan Town office.

Dawn had approached Sarfaraz Rizvi of the Malaysian company for his version on the issue, but he said that he was going abroad and would return in a few days and speak on it. After that, many attempts were made on his cellphone, but he did not respond.