INTERNATIONAL SEMINAR ON

BUSINESS OPPORTUNITIES IN PUNJAB

MEMORANDUM OF UNDERSTANDING (MOU)

A two (2) day International Seminar on Business Opportunities in Punjab

was held in Lahore on the instructions of the worthy Chief Minster Punjab. Investors,

traders, industrialists and representatives of financial institutions from China, Turkey,

Pakistan and other friendly countries participated in the Seminar. The main purpose

of seminar was to explore prospects of investment in different sectors of the

province. The fields focused during the seminar were energy, infrastructure,

housing, transport, industrial zone development, mineral and mines. Water and

sanitation field was also discussed as part of infrastructure.

Water and Sanitation Agency (LDA) briefly known as WASA Lahore also

invited in the seminar to explore the possibility of investment and assistance in the

field of water supply & sewerage services. The special focus was on the Mega

Projects related to water supply & sewerage sector which could not be implemented

either due to financial constraints or due to inadequate technical ability. During the

seminar WASA Lahore contacted the following four (4) International Firms:

TUMSIAD

BEIJING LUPENGDA

KAYLON

STFA

In the seminar WASA Lahore presented the following two (02) Projects

to the International Firms for consideration and signing of MOUs:

i. Construction of Surface Water Treatment Plant.

(Details attached as Annex-I)

ii. Construction of Waste Water Treatment Plant.

(Details attached as Annex-II)

The company detail and negotiation results with each company are as

under:

TÜMSİAD:

The company’s Head Office is located near Police Neighborhood Houses

Lala Pasha Street Blacksmith River Street, Istanbul, Turkey with the contact numbers

0212 280 05 55, Fax: 0212 280 05 54, info@tumsiad.org.tr. The company’s

Chairman Yasar Dogan was contacted in the Seminar. He explained that he has no

Water and Sanitation Expert with him and he shall inform Lahore WASA later on.

Beijing LuPengDa Municipal Engineering Co., Ltd.: The main businesses of the company are:

• Engineering Investment

• Engineering Construction

• Operation & Management

The company scope includes general contracting of construction,

landscaping services, general transportation, engineering consultancies, project

bidding, machinery and equipment leasing, sales of building materials, etc.

When company’s representative was contacted in the seminar, he

explained that Company has no experience in Water and Sewerage Sector.

THE COMPANIES WITH WHOM MOUs WERE SIGNED:

KALYON:

Kalyon Insaat Sanayi ve Ticaret Anonim Sirketi, located at Kavacik Mah.

Ekinciler Cad. Erturk Sok. No:3 Kavacik, Beykoz, Istanbul, Turkey. The company was

founded in 1974 by Hasan Kalyoncu and is now run by his sons and being run on

quality and trust. Since then Kalyon has become a leading construction company in

Turkey's economy. Kalyon claimed its mission is to exceed the expectations and

requirements of its clients by combining knowledge, experience, innovation,

technology and managing all its projects with accurate scheduling and efficient use

of cost principles.

The company’s main features are as under:

Specialties: Construction, Energy, Gas Distribution, Real Estate, Investments

Website: http://www.kalyongrup.com

Industry: Construction

Type: Privately Held

Headquarters: Kavacık Mah. Ekinciler Cad. Ertürk Sok. İstanbul, Beykoz Turkey

Company Size: 5001-10,000 employees

During the seminar, Mr. Salih Levent Kacar, Business Development

Executive was contacted. After detailed discussion Kalyon signed the following two

(2) MOUs with WASA Lahore:

Construction of Surface Water Treatment Plant.

Construction of Waste Water Treatment Plant.

Signing of MOUs between Lahore WASA and Kalyon Turkey

Exchange of signed MOUs to each other by

Managing Director, WASA Lahore and Mr. Salih Levent, Business Development Executive Kalyon Turkey

Main Features of MOUs:

The main features of these MOUs are as under:

i. Project will be executed on EPC & F-Mode.

ii. The Agreement will be enforced from the date on which it is signed i.e. 07.11.2015.

iii. This Agreement will be effective for a period during which transfer of Surface Water Treatment Plant in operational condition to WASA Lahore and clearance of all investment / re-payment of the Loan to be taken by the Government of Punjab.

iv. Any modification can be made by mutual concerned of both parties.

v. The Agreement will be renewed automatically unless either or both parties express their withdrawal in writing subject to three (03) months Notice.

vi. The Government of Punjab will provide Sovereign Guarantee for the Loan to be facilitated by Kalyon.

vii. The coordination between the Ministry of Finance and the Credit Agency will be facilitated by WASA Lahore through HUD & PHE Department (Housing, Urban Development and Public Health Engineering Department) and Kalyon.

viii. Initial cost worked out by WASA is tentative only, which will be examined by Kalyon and WASA in the design stage. The costs are subjected to be updated accordingly.

ix. The validity of this MOU is 18-Months after the signing subject to adherence of Rules.

STFA:

STFA was founded in 1938 by two young engineers, Sezai Türkes and

Feyzi Akkaya. They claimed that their vision was fully-realized at the beginning of

the 1970s when STFA, having established itself in Turkey, broke into the

international market, first in Libya and then in many other countries – It is one of

very few pioneer Turkish contractors to do so. From a bridge and piling construction

company, STFA evolved into a total engineering and construction solutions company,

to become a leader in bringing integrated solutions to the most challenging projects

in the fields of:

• Marine Construction • Civil / Infrastructure Works • Oil, Gas and Power • Soils and Foundation Engineering • Engineering and Management Consultancy

Today, STFA maintains its standing as one the most respected Turkish

contractors in the world. It is proud of its contribution to the development of

countries in the Middle East and North Africa and its role in enhancing social,

cultural, and economic relations between these nations and Turkey. STFA has

experience of over 360 projects, worth an aggregate of $25 billion, successfully

completed on three different continents.

After detailed discussion with Mr. Mustafa Karakus, President STFA and

Mr. Riza Arsan, Advisor to the Board of Directors, the following two (02) MOUs were

signed by President STFA Turkey and the Managing Director, WASA Lahore:

Construction of Surface Water Treatment Plant.

Construction of Waste Water Treatment Plant.

MOU signed by the Managing Director, WASA Lahore

MOU signed by the Mr. Mustafa Karakus, President STFA Turkey

Main Features of MOUs:

The main features of these MOUs are as under:

i. The Project Company agrees to initiate feasibility studies for the Project in Lahore.

ii. Each of the parties shall designate one or more local persons within 15-days the signing of the MOU.

iii. The Parties agree to nominate representatives to meet in Lahore within 2-months of the signing of the MOU, as a kick off meeting.

iv. Once the feasibility studies are completed for the Project based on the business model(s) for the project, the Project Company shall start studies for the development of the Project subject to the viability and feasibility of the investment.

v. If the company decides to proceed with the Project based on the business model and terms to be agreed upon, WASA shall undertake:

- Availability of required land(s) for the construction of the Project and handover the site to the Project Company based on terms to be agreed upon.

- WASA shall facilitate the Project Company in obtaining consents/licenses and security arrangements.

vi. The activities under this MOU shall be subject to the applicable laws and regulations of Pakistan.

vii. This MOU shall remain effective for a period of one year or till the issuance of Letter of Intent (LOI) as per the Implementation Schedule to be agreed

upon, whichever is earlier.

viii. The Agreement will be enforced from the date on which it is signed i.e. 07.11.2015.

Pictures of Delegates with the Honourable Chief Minster Punjab

participated in the Preparation & signing of MOUs

WAY FORWARD MOU Signed with Kalyon Construction Group:

1. Test e-mails were sent and received by both WASA Lahore and Kalyon Group by Lahore WASA on 07.11.2015 and reply by Kalyon on 08.11.2015.

(Interchange of e-mail addresses)

2. On 09.11.2015 WASA Lahore received e-mail from Mr. Salih Levent Kacar, Kalyon

Group saying that “I thank you very much for signing the Memorandum of Understanding with our company. We will do all necessary actions to realize these projects. Attached is our digital catalogue for your kind consideration. We look forward to receiving the feasibility studies done for the “Surface Water Treatment Plant” in Lahore and “Wastewater Treatment Plant (WWTP) of 400 CFS Capacity at South East Lahore”. In the same e-mail Mr. Salih Levent Kacar also sent the company’s catalogue.

3. WASA Lahore will nominate its Focal Person & same will be requested to Kalyon Group.

4. Feasibility study will be reviewed / conducted by Kalyon Group.

5. If Kalyon finds the project feasible then Sovereign Guarantee will be provided by the Government of Punjab for the Loan to be facilitated by Kalyon.

6. Execution of the project will be carried out on EPC and F-Mode.

MOU Signed with STFA Construction Group:

1. Test e-mails were sent and received by both WASA Lahore and STFA Construction Group by Lahore WASA on 10.11.2015 and reply by STFA Construction Group

received on same day i.e. 10.11.2015.

2. Each of the parties shall designate one or more local persons within 15-days the signing of the MOU.

3. The Parties agree to nominate representatives to meet in Lahore within 2-months of the signing of the MOU, as a kick off meeting.

4. Once the feasibility studies are completed for the Project based on the business model(s) for the project, the Project Company shall start studies for

the development of the Project subject to the viability and feasibility of the investment.

5. If the company decides to proceed with the Project based on the business model and terms to be agreed upon, WASA shall undertake:

- Availability of required land(s) for the construction of the Project and handover the site to the Project Company based on terms to be agreed upon.

- WASA shall facilitate the Project Company in obtaining consents/licenses and security arrangements.

6. As the preferred mode of the project according STFA is BOT or PPP, therefore,

WASA Lahore has to approach parallel to PPP Cell of P&D Department, Government of the Punjab.

ANNEX-I

GOVERNMENT OF PUNJAB PLANNING & DEVELOPMENT DEPARTMENT

PROJECT INFORMATION:

1. Project Name: Induction of Surface Water and Construction of Water Treatment Plant for WASA Lahore

2. Location / Site: Near BRB Canal downstream of Ravi siphon and upstream of G.T. Road Lahore.

3. Executing Agency: WASA, LDA.

4. Total Investment amount of project: (Tentative)

Rs.15,534 Million (US$ 155 Million)

5. Role of Private Party/Investor: (Tentative)

Funding amounting to Rs.12,000 Million

6. Role of Government: (Tentative)

Funding amounting to Rs.3,540 Million for cost of Land, Duties, Taxes, etc.

7. Implementation Period: 2–Years Date of Commencement : 2016 Date of Completion : 2018

8. Incentives for Investor: Business promotion Installation of plant and equipment

of investor/ donor country thus providing business opportunities for the industry of donor country

9. Background / Concepts: Lahore is the 2nd largest city of Pakistan & capital city of the Punjab

Province. It is situated at bank of river Ravi. The population of District is more than

10.00 Million and area is about 1772 Sq.Km. The canals are flowing in the city. BRB

Canal for irrigation is flowing into the eastern part, and Lahore Canal branch from

BRB Canal is flowing through central part of the city.

The water supply in the city is purely based on the ground water. The water is

abstracted through 486-tubewells installed in all parts of the district which is generally pumped directly into the distribution system. Currently, the water abstraction by Lahore WASA is 435-MGD whereas 50% of this quantity is also being abstracted by Private Housing Schemes, Cantonment Boards, Railway, Model Town and TMAs.

Due to ever increasing number of tubewells, the water table is depleting rapidly. The current declining rate is more than 1-meter per annum. Excessive withdrawal of ground water has localized or area-wide degradation impacts on

the quality of groundwater in addition to intrusion of wastes or chemicals. Excessive pumping also pull in undesirable water from other formations, such as upcoming from brine-containing aquifers deeper in a sedimentary series and leaving health impacts on residents due to increase in Arsenic concentration beyond the permissible limits EPA/WHO. WASA has installed the Filtration Plants for removal of Arsenic but it has extra burden on WASA /Govt of Punjab. At the same time total dissolve solids (TDS) concentrations is also increasing rapidly.

The strata / aquifer of Lahore are not being recharged adequately due to less

infiltration of rainwater and lack of flood / flow in the River Ravi since the dam has been built in the upper stream (in India) of river Ravi.

The present source may not be remained sufficient for future water demands. Moreover, due to over abstraction of water the arsenic and

Due to these factors there is no other option that surface water may also be inducted in the water supply system of Lahore. 10. Targets:

Induction of surface water in the water supply system of Lahore through construction of first ever surface water treatment plant, which will be capable to water supply to 1 Million population at start and finally to 5 Million population of Lahore city. 11. Objectives:

The objectives of the project are:

To reduce the stress on ground water aquifer because ground water extraction over the years has reduced the ground water potential.

The ground water depletion rate will be minimized. The quality of drinking water will be improved. The area between surrounded by Ring road Bund road, Multan road, Lower

Mall and Ravi road is facing bad smell of the ground water. This area will b served with the better quality of water from this surface water treatment plant.

12. Expected Socio-Economic Impact:

Environment for Investment will be promoted.

Environmental friendly and improvement of public health.

Currently the increasing trend of arsenic, TDS and fluoride will be

controlled by reducing the ground water abstraction.

With the improvement in the quality of drinking water the

incidences of water borne diseases will be decreased, thus

improving the financial condition with reduction in expenditures

on health.

The O&M expenditure of the utility will be reduced. This may lead

to the better financial sustainability of the organization.

ANNEX-II

GOVERNMENT OF PUNJAB PLANNING & DEVELOPMENT DEPARTMENT

PROJECT INFORMATION:

1. Project Name: Construction of WWTP of 400 Cfs capacity at South East Lahore

2. Location / Site: Hudiara Drain near Ferozepur Road, Lahore.

3. Executing Agency: WASA, LDA.

4. Total Investment amount of project (Tentative):

Rs.30,000 Million (US$ 300 Million)

5. Role of Private Party/Investor:

To be decided.

6. Role of Government:

To be decided.

7. Background / Concepts:

All Waste Water generated in Lahore (domestic and industrial) are presently

discharged to the River Ravi through different discharge points and via 13 disposal

pumping stations without maintaining any standards, except the existing course

screening upstream from pumping stations.

Considering the Public Health and environmental protection issues, a rational

approach related to improvement of the River Ravi water quality is absolute by

means of construction of waste water treatment plants.

The scope of work includes:

i) Designing ii) Construction iii) Operation and Maintenance

8. Targets:

Construction of first ever waste water treatment plant in Lahore, which will be

capable to treat the waste water of 20% population of Lahore city.

9. Objectives: Provide wastewater treatment facilities for the domestic sewage of Lahore city

to improve the water quality of River Ravi.

Treat the raw domestic wastewater up to secondary level so as to meet the National Environmental Quality Standards (NEQS) if wastewater is to be discharged into inland waters.

Provide tertiary treatment if the wastewater is to be reused for irrigation. The

tertiary treated effluent should comply with WHO guidelines for restricted irrigation.

Promulgation of Environmental Laws and Regulations.

10. Expected Socio-Economic Impact:

Environment for Investment will be promoted. Environmental friendly and improvement of public health. Reuse of treated water for irrigation purposes. Use of treated sludge as fertilizers. Currently the untreated waste water is being disposed off into

water bodies. This is resulting in deterioration of quality of ground water. With the disposal of treated waste water the deteriorating trend of quality of ground water will not only be stopped but with the passage of time the quality of ground water may improve.

With the improvement in the quality of drinking water the

incidences of water borne diseases will be decreased, thus improving the financial condition with reduction in expenditures on health.

Construction of this waste water treatment plant not only improve the environmental conditions in and around Lahore city but it will also improve the water quality and environmental condition in River Ravi from Lahore to Balloki.