PPRA violations

Two Business Recorder exclusive news items relating to the power sector have identified serious concerns by other government ministries/departments including the Ministry of Planning, Development and Reforms. The first project relates to the incumbent government's flagship Gadani project designed to establish 10 imported coal-based plants of 660MW each; and second project was revealed in a letter to the National Assembly Standing Committee on Planning, Development and Reforms by a private company alleging that the public procurement rules were violated in the award of the contract of 48MW Jagran-II hydro power project by the Board of Power Development Organisation Azad Jammu and Kashmir.
With respect to the Gadani project several ministries reportedly raised some serious concerns ranging from the location of the park not based on a feasibility study, the drift of the jetty at 17.9 instead of 20 to accommodate ships of size 240,000 to 210,000 DWT, the hiring of the consultant on a single source basis with Nargis Sethi clarifying that the decision to appoint Nespak was taken by the Prime Minister. And most disturbing of all was the concern raised by Member I&RC as well as the Chairman CDWP that if the country's transmission system could not withstand more than 15000MW electricity, an admission made by the Secretary Water and Power during a widely reported parliamentary committee meeting, then the additional generation from Gadani may simply not be available to the end-user - a concern that seriously brings into question the relevance of the feasibility study carried out for the project. The consultant acknowledged that the distribution aspect was not a part of the feasibility study.
There is no doubt that the incumbent government is proactively seeking to expand generation through setting up various mega projects; however, legitimate objections are being brushed under the carpet with the focus entirely on enhancing generation. It maybe recalled that potential generation today, and for the past five years, is still estimated to be equivalent to demand; however, the issues plaguing the sector are the continuing circular debt, the distribution system's woeful weaknesses and the obsolete transmission system - issues that remain as prevalent today as they did during the PPP-led coalition government less than two years ago.
The Jagran II project that according to the private company will lead to a loss of Rs 400 million was another violation of public procurement rules: awarding the contract to the second highest bidder at a bid price offer that was Rs 400 million higher than that of the lowest bidder. PPRA 2004 rules clearly and unambiguously note in para 38 that the "bidder with the lowest evaluated bid, if not in conflict with any other law, rules regulations or policy of the federal government, shall be awarded the procurement contract with the original or extended period of bid validity."
However, those who criticise the government's decision to keep PPRA rules in abeyance with respect to its over $35 billion agreements with China must note clause 5 of the PPRA: "whenever these rules are in conflict with an obligation or commitment of the federal government arising out of an international treaty or an agreement with a state or states or any other financial institutions the provisions of such international treaty or agreements shall prevail to the extent of such conflict."
It is indeed unfortunate that the incumbent government has been almost routinely violating PPRA rules which were designed and approved with full support from multilateral and bilateral agencies as a means to check pervasive corruption in public procurements. While it is difficult to quantify exactly yet analysts are agreed that more than 50 percent of corruption accrues from violating PPRA rules. It is critical for the government to adhere to the PPRA rules to ensure transparency as much as it possibly can and at the same time going gung-ho for power projects without a comprehensive feasibility study would simply compound our problems.