The National Accountability Bureau's instructions and Public Procurement Regulatory Authority (PPRA) rules have been violated in the award of contract for the construction of two pedestrian bridges on BOT basis in Karachi.
Transparency International Pakistan Chairman Sohail Muzaffar in a letter sent to the executive officer, Cantonment Board Clifton (CBC), on April 4, has informed him that a complaint has been received on "illegally exempting cantonment board tax on hoardings to facilitate favoured parties by awarding construction of pedestrian bridges on BOT basis." Also similar efforts are in process to award four more pedestrian bridges by inviting tenders to be submitted on April 8. The terms of the tender are also in violation of PPRA Rules 2014.
After examining the allegations, TI-Pakistan has made following observations:
1. According to the Cantonments Act, 1924, CBC can not exempt any hoarding from hoarding tax levy, and CBC shall recover the hoarding tax from the two BOT parties, according to law, per annum to date, and annually at the prescribed tax rate, as notified by CBC from time to time.
2. The tender notice for four pedestrian bridges does not include the evaluation criteria, draft format of BOT contract agreement, and scope of work, in violation of Rule 23.
3. Tenders are to be opened publicly according to PPRA Rule 28, and CBC is violating this rule.
4. CBC shall formulate precise and unambiguous bidding documents that shall be made available to the bidders immediately after the publication of the invitation to bid.
5. CBC has not posted the tender documents on PPRA website.
The complaint has alleged following violations:
1. Hoarding Tax is a statuary levy, and can not be exempted by Cantonment Board Clifton.
2. According to Sindh High Court (SHC) judgement in CP No D-540/2009, fee on hoarding is a tax levy under Cantonments Act, 1924.
3. Hoarding tax is levied at Rs 2,500 per square feet per annum.
4. Construction cost of each pedestrian bridge is approximately Rs 4-6 million, and the BOT contractors are being given illegal financial benefit, at the cost of exchequer, for the whole BOT period, which ranges from 4-7 years.
5. Market rate for advertising per 2,000 sqft is approximately Rs 2,000,000 per month. The BOT contractors are earning approximately Rs 24,000,000 per annum from each bridge.
6. The two pedestrian bridges on Chaudhry Khaliq-uz-zaman Road have two hoardings each on both sides of total area 2,000 sqft. CBC hoarding tax is Rs 5,000,000 per annum on hoardings on each pedestrian bridge, which is a loss to exchequer annually on each bridge.
7. The tender notice is in violation of PPRA Rules.
The Transparency International Pakistan Chairman has informed CBC that according to NAB instructions of January 8, all procuring agencies should make available the bidding or prequalification documents and other related communication in downloaded format, for any interested bidder or party, at their website to use these documents for submitting bid(s) with admissible tender fee, if any, paid in bank as prescribed by procuring agency.
NAB has also declared mis-procurement as liable for cognisance by NAB under relevant section of NAO 1999, and according to Rule 50, any violation of PPRA Rule is mis-procurement.
Transparency International Pakistan has requested CBC to immediately take action for the lost CBC tax revenue from two BOT parties, and cancel the tender notice for four pedestrian bridges. The tender documents prepared by CBC, should not give any tax exemption, and re-invite the tenders.
Under the Rule 47, provide the contract agreements of the two pedestrian bridges to TI Pakistan, to examine the terms and conditions for any alleged undue advantage given to the parties. TI Pakistan is striving to have rule of law in Pakistan, which is the only way to eliminate corruption and have good governance in country.
Copies of the letter have been forwarded for information with the request to take action under their mandate to: Secretary to Prime Minister, Islamabad, NAB Chairman, Islamabad, PAC Chairman, Islamabad, Minister of Defence, Islamabad, Registrar, Supreme Court of Pakistan, Islamabad, and Managing Director of PPRA, Islamabad.
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