ISLAMABAD: The Public Procurement Regulatory Authority (PPRA) is all set to discuss inquiry report on procurement of used vessels by Pakistan National Shipping Corporation (PNSC) on negotiated basis instead of tendering, sources in Finance Ministry told Business Recorder.
The PPRA, sources said, will discuss final report of “inquiry into the financial corruption in the purchase of two used AFRAMAX vessels at exorbitant prices” prepared in September 2023 by Prime Minister’s Inspection Commission (PMIC).
The report was forwarded to PPRA by the PM Office on October 6, 2023, wherein, it was desired that the report be placed before the PPRA Board which will offer views/comments to Prime Minister Office, at the earliest.
Buying two second-hand vessels: PPRA decides to recommend govt give exemption to PNSC
The PMIC in compliance with the directives of the Prime Minister conducted the inquiry regarding the purchase of two used Aframax vessels to ascertain ToRs: (i) whether the purchase of two used Aframax vessels during the year 2022 was made in line with the regulatory compliance of PPRA Rules, 2004/any other relevant law, or otherwise; (ii) the element of financial corruption and corrupt practices in the purchase of two Aframax vessels, if any, and to identify the officials/personal involved in purchase of the said vessels; (iii) estimation of financial implication/cost to the government and the national exchequer and recovery of the same, if any; and (iv) identification of the weaknesses, legal and regulatory evaluation to propose a way forward in the purchase of vessels.
According to the background, Pakistan National Shipping Corporation purchased two vessels, viz Sargodha and Mardan by invoking Rule 42(d)(ii) of PP Rules, 2004 with the approval of the PNSC Board in its meeting held on April 25, 2022 at a price of $ 21 and $ 21.75 million, respectively. As per report, the purchase of the said ships was carried out by the PNSC by wrongly interpreting Rule 42(d)(ii) of PP Rules, 2004 (Page-36 of Inquiry report).
The Prime Minister authorized the inquiry related to the procurement of second-hand ships on a reference by relevant Senate Standing Committee.
Accordingly, Chairman PMIC, constituted Prime Minister’s Inquiry team (PMIT) as per Clause 7 of the PMIC. The PMIT inquired the purchase of the used ship from the relevant stakeholders including Ministry of Maritime Affairs, Pakistan National Shipping Corporation, Ministry of Finance and PPRA.
The PNSC in response to the inquiry maintained that the said ship was procured in accordance with Rule-42 (d)(ii) of the Public Procurement Rules, 2004 as per past practice (as per Inquiry report).
According to the inquiry report, PPRA’s consultant (Sustainable Development Consultant Pvt Ltd) was working on the “Review and Re-engineering of Procurement Procedures and Practices of PNSC in line with Public Procurement Rules, 2004” and the consultant in its letter of April 10, 2010, addressed to MD PPRA stated that “humbly we would point out that PNSC has been in willful default of the law, the PPRA Ordinance, 2002and PP Rules, 2004, for the last five years plus”.
Consequent to the consultant’s letter, PPRA convened a tripartite meeting at the PPRA Head Office Islamabad on May 05, 2010, to discuss the issue raised by the consultant. Subsequently, the minutes of tripartite meeting were issued on May 14, 2010 relevant para is reproduced as under (Page-11 of Inquiry report): “PNSC explained that presently procurement of second-hand ships is advertised in local and international media for enlistment without time limit.
Since there is formal market available for procurement of second-hand ships, PNSC is constrained to undertake negotiations through brokers when it finds that some second-hand ship is available anywhere in the world for sale. Tendering process is not possible in this case and they have to undertake negotiations. Since the PP Rules do not allow any negotiations, PNSC requested for procurement of second hand ships within the framework of PP Rules-2004.
PPRA suggested pre-qualification method under Rule-15 of PP Rules, 2004 but PNSC did not agree stating that due to non-availability of formal-market it is not a viable solution therefore they were suggested to invoke Rule-42 to undertake such procurements under direct contracting negotiated tendering provided the underlying conditions are fully met. PNSC agreed with the point of view of PPRA as a solution to their issue.“
The PNSC misused tripartite meeting minutes and procured ten used ships including the two under inquiry in violation of the Rule 42(d(ii) of PP Rules, 2004.
Findings and conclusion of the report are as follows: The inquiry report highlighted that the issue cropped up from representation, mis-interpretation, mis-construction and contradictory recording of the decisions of the tripartite meeting as of May 05, 2010 and deliberate, illegal and wrong interpretation and application of PPRA Rules, 2004 by PNSC.
The report stated following specific observations (Page-36 of Inquiry report): (i) PNSC has been engaged in the purchase of second-hand vessels (present fleet), in violation of PPRA Rules, 2004, including the two vessels under inquiry viz. Mardan and Sargodha purchased in year 2022; (ii) since all procurement was required to be made in compliance of PP Rules, 2004, the PNSC considered it as a hurdle in procurement of second-hand vessels available anywhere in the world for sale, tender process is not possible in this case and they have to undertake negotiations; (iii) the two vessels under inquiry were purchased by PNSC wrongly invoking Rule 42(d)(ii) of PPRA Rule, 2004.
The inquiry report directed the PPRA to strengthen its monitoring function as required under Section 05 of PPRA Ordinance, 2002 and detection of serious violations should be duly reflected in its annual reports presented to the Government“.
PPRA has recommended that the said inquiry report be placed before the PPRA Board to guide in the matter for further proceedings and submission of report to Prime Minister’s Office.
Copyright Business Recorder, 2024
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