Transparency International Pakistan has taken up the allegation of "collusive practice in award of a Rs 6.5 billion contract to M/S. Oslo to replace 65,000 conventional street-lamps with Light Emitting Diode (LED) lights.
Syed Adil Gilani, Adviser, Transparency International Pakistan in a letter sent to Farkhand Iqbal, Chairman, Capital Development Authority (CDA) on April 2 has drawn his attention to reports that the CDA with No Objection Certificate (NOC) of National Accountability Bureau (NAB) is proceeding to award contract totalling Rs 6.5 billion for installation of LEDs.
Transparency International Pakistan is of the view that if the CDA awards this controversial contract at Rs 6.5 billion, for a project of only Rs 1.35 billion, extra Rs 5 billion will be paid by people of Pakistan, which needs to be saved, by implementing PPRA Ordinance 2002, and Public Procurement Rules 2004, as even Public Procurement regulatory Authority has no mandate to give the CDA any NOC for such violations in this procurement.
"This is to state that only the PPRA has been mandated by its Ordinanace-2002 to monitor and regulate the application of law and rules relating to public procurement of all goods, services and works. The PPRA does not indulge in line clearance functions nor is this function covered by law," he said.
He said that the project award process has many allegations, and from reports, following irregularities are being identified, which needs to be addressed by the CDA, Planning Commission, Asian Development Bank, ECNEC and ECC, as the estimated cost of the Project is said to be over Rs 6.5 billion.
On December 31, 2011, Transparency International Pakistan had informed the CDA that Asian Development Bank is reported to be providing loan for this project, and that the ADB does not provide loans to projects not tendered transparently, and in case the ADB has agreed to provide loan for this project based on the CDA contract at the cost of Rs 6.5 billion, the ADB has also violated its own principles.
The CDA had stated in its letter dated January 9, 2012 to Transparency International Pakistan and Chairman NAB, Chairman PAC, MD PPRA, AGP and Supreme Court of Pakistan, that the project is funded principally by Asian Development Bank which includes soft terms for repayment. That as the Asian Development Bank is reported to have denied that the ADB ever agreed to fund this project, and that the Asian Development Bank on January 4, 2012 had officially informed the CDA and the Ministry of Water and Power that the bank was not going to fund the project, the statement of the CDA amounts to misleading the government institutions by reporting that "this is an ADB funded project".
That Asian Development Bank had refused to finance this project, due to the allegation that the CDA had not done the bidding process for the Rs 6.5 billion project in line with the standard bidding process defined by ADB for a funded project. The CDA shall note that PPRA bidding process is more stringent than the ADB bidding process. One of the reasons is that Supreme Court of Pakistan had declared all RPPs as illegal. That Planning Commission has not approved the PC-I till today, without which the CDA is not supposed to invite tenders, under Rule No 11.
Rule 11. Approval mechanism All procuring agencies shall provide clear authorisation and delegation of powers for different categories of procurement and shall only initiate procurements once approval of the competent authorities concerned has been accorded.
That Dr Nadeemul Haq, Dy. Chairman Planning Commission himself confirmed to Transparency International Pakistan that PC-I was not approved, as the estimated cost by CDA is many times more than the competitive market prices. That CDA has prescribed Rs 150,000 a cost of P/Q documents, which is violation of Rule No 16.
16(2) The procuring agency shall provide a set of pre-qualification documentsto any supplier or contractor, on request and subject to payment of price, if any. Explanation.- For the purposes of this sub-rule price means the cost of printing and providing the documents only.
That only LED Lights are to be replaced on the poles already available. The market prices of such lights on international competition is approx. Rs 20,000 to 22,000 if procured in bulk. In case the CDA floats a tender for procurement of 65,000 LED lights, it will cost only Rs 1.36 billion, which is stated to be cost of energy payment being made annually by the CDA. The CDA can replace the lights itself as it has hundreds of staff for maintenance and either auction the 65,000 lights, or gift them to other cities.
That "the CDA even doesn''t have funds amounting to Rs 1.6 billion, 25 percent of the Rs 6.5 billion LED lights project, required to initiate the project. Now, Planning Commission has suggested us to take Cash Development Loan from the federal government," which is post tender condition, not allowed under the PPRA Ordinance and Public Procurement Rules 2004. The Supreme Court of Pakistan in the RPP case has declared such changes as illegal, and acts of such violation is are liable to be dealt with under the National Accountability Ordinance, 1999 by the NAB.
All the Government functionaries, including the Ministers for Water & Power holding charge in 2006 and onward and from 2008 to onward, during whose tenure the RPPs were approved/set up and Minister as well as Secretary Finance holding the charge when the down payment was increased from 7% to 14%, prima facie, violated the principle of transparency under Articles 9 & 24 of the Constitution and section 7 of the Act, 1997, therefore, their involvement in getting financial benefits out of the same by indulging in corruption and corrupt practices cannot be overruled in view of the discussion made hereinabove. Consequently, they are liable to be dealt with under the National Accountability Ordinance, 1999 by the NAB;
Adil Gilani said that if this procurement is declared as mis-procurement under rule 50, alleged contract may also be subject to Rule 7, Integrity Pact, and liable for 10 times fine on Rs 5 billion, which comes to Rs 50 billion on the contractors, and under Rule 2(f), "corrupt and fraudulent practices" which includes collusive practices among bidders (prior to or after bid submission) designed to established prices at artificial, non-competitive levels and to deprive the procuring agencies of the benefits of free and open competition.
Transparency International Pakistan is striving for the application of Rule of Law in Pakistan, he said. Copies of the letter have been forwarded for the information and action under the rules and regulations to: Chairman, Public Accounts Committee, National Assembly, Islamabad, The Registrar, Supreme Court of Pakistan, Islamabad, Chairman, NAB, Islamabad, Deputy Chairman, Planning Commission, Islamabad, Managing Director PPRA, and Auditor General Pakistan, Islamabad.
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