Equipment and vehicles for discos: ADB agrees to appointment of Pepco as 'procurement agent'

The Asian Development Bank (ADB) has agreed to the appointment of Pakistan Electric Power Company (Pepco) as 'procurement agent' on behalf of power distribution companies (discos), official sources told Business Recorder. However, Pepco has to follow the International Competitive Bidding (ICB) mechanism, with ADB's prior review procedures, sources added.
They said that ADB had approved a change in the procedure on September 23, 2009 to include procurement of operational and transport vehicles for a total cost not exceeding $14 million. This mechanism is meant for implementation arrangement to modify the category description for categories 01B, 02B, 03B, 04B, 05B, 06B, 07B and 08B from 'equipment and vehicles'. With this approval, ADB will not have any objection to the procurement of proposed vehicles and equipment indication.
The ADB, has, however, admitted that the discos had never procured such kind of vehicles (heavy cranes) before. Therefore, for this particular case only, the Bank has recommended that Pepco should take the role of 'procurement agent' if all the discos agree and nominate Pepco to procure these vehicles on behalf of all discos.
The role of 'procurement agent' will be restricted to preparing bidding documents, floating tender and evaluating the bids only. "Once the evaluation process is completed, each disco will sign a separate contract with the lowest evaluated bidder for the number of vehicles as per the scope, and payments against the contracts will be made by each disco directly through ADB," sources added.
For the sake of further transparency and ownership, an evaluation committee will be constituted by having a representative member from each disco and headed by a Pepco representative.
Earlier, the Bank had threatened to cancel part of the loan for power transmission, enhancement investment programme, tranche 2, if procurement processwais not completed on time.
The Bank said that overall implementation progress of the project has generally been slow. As of July 31, 2009, physical progress achieved was estimated at 13 percent, compared with the elapsed loan period of 21 percent. Cumulative contract awards and disbursements achieved are $41.8 million and $11.7 million, or 30 percent and 19 percent of the 2009 projections of $140 million and $62.5 million, respectively, which were jointly prepared at the beginning of the year.
Pil-Bae Song, a Director of the ADB, in a letter to Tariq Qazi, Chief Executive, National Transmission and Dispatch Company (NTDC), observed that progress on procurement was significantly behind schedule and if the majority of the civil works contracts could not be awarded by the end of 2009 completion of all sub-projects by end-2013 would be at high risk.
"As has been extensively discussed, the current practice of procuring civil works, materials and equipment through multiple contract packages and diversified lots increases processing time and load for both NTDC and ADB and eventually slows down project implementation," he said.
There are 15 contract packages remaining, including civil works and supply of material and equipment to be procured. One option would be to club the remaining contracts into the following four packages: (i) civil works for grid stations at T T Singh, Okara, and Ghazi Barotha, on turnkey basis; (ii) civil works for 220 kv transmission lines; (iii) SVC installation at Quetta on turnkey basis; and (iv) procurement of materials and equipment. Procurement of 4 contract packages instead of 15 would clearly save cost as well as time.