Purchase of Compact Fluorescent Lamps: Pepco accused of violating ADB criterion

The Pakistan Electric Power Company (Pepco) is reportedly violating Asian Development Bank''s (ADB) procurement criterion in procurement of millions of Compact Fluorescent Lamps (CFL)--energy savers--to be distributed among the consumers free of cost, sources close to Minister for Water and Power told Business Recorder.
CFLs, contain mercury, which is poisonous for human health even in small amounts, is considered a concern for landfills and waste incinerators where the mercury from lamps may be released and contribute to air- and water-pollution. Sources said that tranche-1 of the loan will finance national CFL program which aims at replacement of 30 million incandescent bulbs in domestic sector, spread in eight power distribution companies (discos) and Karachi Electric Supply Company (KESC) with high quality CFLs.
The project is being jointly funded by ADB and AFD of France for $40 million and $25 million respectively. The loan will be extended to GoP which will bear the cost of CFLs. Pepco will purchase the CFLs in bulk (in two rounds of 10 million and 20 million) on behalf of GoP and will distribute to domestic consumers through all discos and KESC free of cost in exchange for 40-100 energy savers.
The distribution cost will be borne by the discos and KESC, using their own resources. Pepco claims that the project will help in reducing peak demand by over 1000 mw in avoiding generation of 1600 mw ($1.84 bn) and saving of about 2000 million units of energy equivalent to Rs 17.5 billion.
According to Pepco, it will also help save subsidy extended to lifeline consumers estimated at $60 million per year. The project will yield Clean Development Mechanism (CDM) revenues of about $12.6 million by 2012 and another $20 million by 2018. It will also help in reducing consumers'' bills by Rs 300 per bulb per annum. The electricity saved can be sold to higher tariff consumers generating additional revenues of approx $29 million per year for discos.
Sources said that Firefly Lighting China was declared the lowest responsive bidder for 10 million CFLs, but the supplier extended bid validity by imposing condition of accelerated price, which is not in line with ADB procurement guidelines. Sources further said that after approval of the Ministry of Water and Power, ADB has been approached for according concurrence to cancel the round-I bidding and include procurement of 10 million CFLs in the tender of 20 million.
Pepco has already forwarded bidding documents to the ADB for 2nd round of 20 million CFLs, which is under approval. The agreement for hiring of validator for registration of CFL project with United Nations Framework Convention on Climate Change (UNFCCC) as CDM project has been signed with DNV of Norway and the project has been posted on UNFCCC website.