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ECC Raises Concerns Over Ministry of Interior’s Decision on Huawei Safe City Payment

The Economic Coordination Committee (ECC) of Pakistan has expressed concern over the Ministry of Interior’s decision to challenge court orders regarding the payment of outstanding liabilities to Huawei Technologies for the Safe City project in Islamabad. The ECC has directed the Ministry to review its internal legal processes and explain the rationale behind initiating an intra-court appeal against the ruling, which was issued by the Islamabad High Court (IHC).

This decision comes after the IHC’s directive for the Ministry of Interior to release the outstanding payment of $6.17 million to Huawei Technologies. The payment is for the Safe City project, which has been delayed for several years, and ECC’s concerns are compounded by the fact that the payment is due five years after the expiration of the contract.

Background: Safe City Project and Huawei’s Pending Payment

What is the Safe City Project?

The Safe City project in Islamabad was launched with the aim of enhancing the city’s security through the installation of an integrated surveillance system. The project, which was contracted to Huawei Technologies, was signed on December 29, 2009, with an overall contract value of $124.719 million. The primary goal of the project was to equip Islamabad with a state-of-the-art security system to monitor and manage law enforcement and emergency response efforts effectively.

The Remaining Liabilities and Legal Complications

While the majority of the payment, amounting to $118.549 million, was successfully cleared through a concessional loan provided by the government of China via the Exim Bank of China, the remaining 5% payment, totaling $6.17 million, has remained unpaid. This has been a significant source of tension between the Ministry of Interior and Huawei Technologies, with the company filing a writ petition in the Islamabad High Court (IHC) seeking payment of the outstanding amount.

Court’s Ruling and Ministry’s Appeal

On October 12, 2023, the Islamabad High Court (IHC) ruled that the Ministry of Interior had unduly delayed the payment without proper justification. The court directed the Ministry of Interior, in coordination with the Finance and Economic Affairs Divisions, to clear the outstanding liabilities.

Despite the court ruling, the Ministry of Interior filed an intra-court appeal on December 14, 2023, seeking a reconsideration of the order. However, the appeal was dismissed by the IHC. The Ministry, therefore, was required to comply with the original ruling and clear the outstanding liabilities.

ECC’s Concerns Over the Ministry’s Actions

ECC’s Directive to the Ministry of Interior

The ECC, which is the economic decision-making body of the Pakistani government, questioned the Ministry of Interior’s decision to file an intra-court appeal against the court’s orders. The committee pointed out that the Law and Justice Division had already advised against such legal action, yet the Ministry proceeded with the appeal. The ECC has now instructed the Ministry of Interior to provide a detailed explanation for this decision and submit a report for the committee’s review.

The committee further emphasized that the Ministry of Interior should take the initiative to resolve the matter with Huawei Technologies independently and settle the pending payment in accordance with the IHC’s ruling.

The Finance Division’s Stance on Payment Settlement

The Finance Division supported the ECC’s directive, stressing that the Ministry of Interior should determine the mode and manner of payment to the vendor. It was also emphasized that the Ministry should follow through with the resolution of the issue, as the matter was now under the jurisdiction of the IHC.

The Role of the Exim Bank of China in the Payment Process

Exim Bank’s Position on Loan Extension

A significant challenge in clearing the outstanding liabilities is the expiration of the Exim Bank loan. The remaining amount of $6.17 million could not be settled because the Exim Bank loan had expired before the final inspection and handover of the project. In an attempt to resolve this, the Ministry of Interior requested the Exim Bank of China to extend the loan validity. However, the Exim Bank responded by stating that an extension was not feasible, leaving the Ministry with no other option but to seek alternative arrangements to clear the liabilities.

Request for Technical Supplementary Grant

To resolve the matter, the Interior Division requested that the Finance Division provide a technical supplementary grant to pay the outstanding liabilities. The Finance Division, in turn, endorsed the request and called for the matter to be sent to the ECC for approval.

ECC Approves Technical Supplementary Grant

After careful consideration, the ECC approved the proposal for the technical supplementary grant to clear the outstanding liabilities of $6.17 million. This decision was made in compliance with the IHC’s ruling and the directives of the Central Development Working Party (CDWP). The ECC’s approval now paves the way for the Ministry of Interior to finalize the payment to Huawei Technologies.

The CDWP’s Involvement in the Process

The Central Development Working Party (CDWP) reviewed the position paper submitted by the Ministry of Interior and issued a decision, which was endorsed by the Finance Division. The CDWP’s decision stipulated that the Ministry of Interior should coordinate with the Finance Division to clear the pending liabilities in line with the IHC’s decision.

The Finance Division’s endorsement of the CDWP’s decision further reinforced the call for the ECC to approve the payment to Huawei Technologies. The Interior Division, after receiving the endorsement, presented the summary to the ECC for approval of the technical supplementary grant.

FAQs: Clarifying the Issue of Huawei Technologies’ Payment

1. What is the Safe City project in Islamabad?

The Safe City project is an initiative aimed at improving the security of Islamabad through the installation of an integrated surveillance system. The project was contracted to Huawei Technologies in 2009, with a contract value of $124.719 million.

2. Why has Huawei not received the full payment for the project?

The remaining 5% of the payment, totaling $6.17 million, has not been made due to the expiration of the Exim Bank loan before the final inspection and handover of the project.

3. What did the Islamabad High Court rule regarding the payment?

On October 12, 2023, the IHC ruled that the Ministry of Interior had unduly delayed the payment to Huawei Technologies and directed the Ministry to release the payment. The Ministry of Interior was required to comply with the court’s directive.

4. Why did the Ministry of Interior file an intra-court appeal?

The Ministry of Interior filed an intra-court appeal against the IHC’s order, despite receiving advice from the Law and Justice Division to refrain from doing so. The ECC has directed the Ministry to explain the rationale behind this decision.

5. How will the payment to Huawei Technologies be made?

After the ECC’s approval, the Finance Division will release the payment of $6.17 million to Huawei Technologies as a technical supplementary grant, in compliance with the IHC’s directive.

Conclusion: A Step Towards Resolution

The ongoing issue surrounding the payment of outstanding liabilities to Huawei Technologies has been a point of contention between Pakistan’s economic managers and the Ministry of Interior. With the approval of the technical supplementary grant by the ECC, the matter is now closer to being resolved. However, the Ministry of Interior must ensure compliance with the court’s directives and follow the established processes to ensure smooth implementation