Award of contract to Russian firm: Transparency International disputes Pakistan Steel's response

Across the board application of Public Procurement Rules 2004 in Pakistan Steel's procurements since 2004 under the guidance of Transparency International Pakistan had resulted in windfalls as it attained a surplus of over two billion rupees in 2007 but violations of these rules since 2008 have resulted in current situation where losses have mounted to Rs 70 billion in last four years.
This is how Transparency International Pakistan has responded to Pakistan Steel's March 12, 2012 letter to Public Procurement Regulatory Authority explaining its position on the objections raised by Transparency International Pakistan in its letter of January 28, 2012. Adviser, Transparency International Pakistan, Syed Adil Gilani in a letter sent to the acting Chief Executive Officer, Pakistan Steel on March 30, had disputed Pakistan Steel's response relating to the violation of Public Procurement Rules 2004 in the award of consultancy contract for technical audit to V0 Tyahpromexport of Russia.
"It is strange", he said that the Secretary, Pakistan Steel had stated in his letter of March 2, 2012 to Transparency International Pakistan that the tender for technical audit had not been awarded to the Russian firm, VO Tyahpromexport, and the same would be processed in accordance with the rules and procedures, but, the response given by Pakistan Steel to the Public Procurement Regulatory Authority on March 12, is that: "Pakistan Steel has decided to get waiver of Public Procurement Rules 2004 to award the contract for technical audit to VO Tyahpromexport for 150,000 dollars".
He pointed out that Pakistan Steel's statement vide para 04 of its report to PPRA that VO Tyahpromexport, the original designer and manufacturer of Pakistan Steel's plant is not based on facts. Secondly, if the statement of Pakistan Steel is true, then this is of a serious concern of conflict of interest, as the technical audit, if awarded to VO Tyahpromexport, with exemption to the Public Procurement Rules 2004, will lead to the award of design as well as supply of the machinery to the same firm based on the estimates solely prepared by the same firm under the technical audit report prepared by VO Tyahpromexport, which may be two to three times costlier than the competitive market rates.
This issue was also raised by Transparency International Pakistan in 2010, and the assurance was given by Pakistan Steel at that time that all the contracts by Pakistan Steel would be awarded by inviting public tenders under Rule No 21 of the Public Procurement Rules 2004, and an MOU was signed wherein it was agreed that Transparency International Pakistan would act as an observer in all such procurements of Pakistan Steel, he said.
Gilani requested Pakistan Steel to refer to the report submitted in the Supreme Court by Pakistan Steel where the losses to Pakistan Steel only for one year, ie 2008 have been confirmed to be Rs 26.526 billion. He, therefore suggested Pakistan Steel management not to violate the Public Procurement Rules 2004, as across the board application of the Public Procurement Rules 2004 in Pakistan Steel's procurements since 2004 under the guidance of Transparency International Pakistan have proved to be most beneficial to it, as it attained a surplus of over two billion rupees in 2007, and the violation of Public Procurement Rules 2004 since 2008 have resulted in current situation, where the losses have mounted up to Rs 70 billion in last four years. Transparency International Pakistan was striving for the Rule of Law, he said.
Copies of the letter have been forwarded for information to: Chairman, Public Accounts Committee, Islamabad, Registrar, Supreme Court of Pakistan, Islamabad, Chairman, NAB, Islamabad, Auditor General, Government of Pakistan, Islamabad, and Managing Director PPRA, Islamabad.