Ministry, EDB accused of pocketing billions from auto sector companies

Ministry of Industries and Production and its attached organization Engineering Development Board (EDB) on Monday have been accused of pocketing billions of rupees from auto sector companies and compromising on the standards of locally assembled cars.

These accusations were hurled during a meeting of National Assembly Standing Committee on Industries and Production presided over by Sajid Hussain Turi. Additional Secretary Ministry of Industries and Production, Capt. Sher Alam Mahsud (retired) refuted corruption charges, saying that "I have heard about briefcases but never saw them with own eyes."

At the time of corruption accusations, Prime Minister's Advisor on Industries and Production, Abdul Razak Dawood and Secretary Industries, Afzal Latif were not present in the meeting.

The CEO EDB said the main role of EDB was to envisage investment in the auto sector under the ADP Policy 2016-21. As far as the standards are concerned, other bodies likes PSQCA deal with such matters. EDB in its written reply on the issue of use of air bags and Anti Lock Breaking System (ABC) in automobile vehicles said the organisation does not have the mandate to regulate/ monitor vehicle quality, standards, road worthiness and pricing etc. However, under the ADP 2016-21, EDB is processing Pakistan's case of becoming a member of Working Party (WP)-29. Summary for adoption of ADP-29 is approved by Cabinet and accession document has been forwarded to the Ministry of Foreign Affairs for submission to UN Secretariat WP-29. The regulation will ensure compliance by local manufacturers of certain regulations under WP-29 forum.

According to the EDB, reportedly, car manufacturers follow the manufacturing standards of their principals. The engines of case are mostly Euro-II compliant as the petrol/ gasoline available in Pakistan is Euro-II standard.

Ali Gohar Khan said that Pakistani car assemblers do not fulfill international standards, adding that there is massive difference in interiors of five years used cars and newly assembled Pakistani cars. If a Pakistani invests Rs 3 million or Rs 4 million to buy a car, he does not have any other choice due to "monopoly" of three car companies. At the same time assemblers are earning billions of rupees profits per annum. He further stated that prices of cars are increasing. He stated that Pakistanis are being "looted" with both hands and urged that at least standard of locally assembled and imported cars should be the same.

"The officials of Industries Ministry/ EDB are swallowing billions of rupees since years. If the officials of the Ministry present and past and Ministers including ex-Ministers and politicians were honest, the situation we are facing today would have been different and a mechanism would have been put in place and things would have improved," he continued.

Ali Gohar said he would also raise this issue on the floor of the National Assembly and would not hesitate to move the court to improve the standards of locally assembled cars.

Additional Secretary replied he also used to hear about "briefcases" but never saw any briefcase, adding that he does not think anybody is engaged in corruption. He maintained that the courts can determine who is corrupt and who is not corrupt the Ministry cannot do it. As far as the standards are concerned Additional Secretary said he formulated the Auto Policy, but he has no knowledge who is following the standards as this is the domain of another organisation. He said, whatever is related to automobile should be with EDB, adding that the Ministry is recommending a project for the budget meant to establish a laboratory to test the standards of car parts and accessories.

Additional Secretary stated that car assemblers are also not clean and suggested that a special meeting be convened on auto sector in which EDB gives a presentation.

Babar Khan, the representative of M/s Indus Motors Company, informed the committee that the main reason for the increase in car prices is imposition of additional customs duty of 7.5 per cent in addition to excise duty on cars dealers ranging from 2.5 per cent to 7 per cent. He further stated that M/s IMC fulfils international standards. Airbags have been fitted in cars and WP-29 standards are being followed.

Rana Ishaq Khan enquired about the impact witnessed on sale of cars after imposition of new taxes. Babar Khan replied that there has been a decline of 60 percent adding that some are operating at 40 and 45 percent production capacity.

Rana Ishaq Khan said that people are unable to purchase cars because of rising taxation. He further argued that a middle income person cannot afford to buy such expensive cars. Babar Khan informed the committee 40 percent of total price of cars goes to the government as taxes.

Babar Khan further stated that if auto industry was bribing the officials, Additional Secretary would not have been so harsh with industry. He invited Committee Members to visit IMC plant and see with their own eyes how his company is following international standards.

The committee also raised questions on the quality of items of Utility Stores Corporation (USC) and closure of USC outlets. Chairman Standing Committee Sajid Turi said that the country is facing wheat crisis, suggesting USC should sell flour to the citizens at reduced rates.

Ali Gohar Khan and Rana Ishaq maintained that the quality of USC items is substandard. They said Shahbaz Sharif reduced the rates of flour, adding that PTI cannot compare with the prevailing price of wheat during what it was in Shahbaz Sharif's government.

Pervez Malik said that Shahbaz Sharif has demanded a probe to fix responsibility for the wheat crisis. Committee members hailing from PML (N) supported Shahbaz Sharif's proposal.

Managing Director USC, Aamir Lodhi said that 20 kg bag of flour is being sold at Rs 800 in USC outlets across the country.