Transparency International Pakistan (TIP) has requested the Supreme Court to take suo motu notice of the biggest scam in the country in 'award of rental power plants (RPPs) contracts' with post-bid changes that benefited sponsors.
In a letter to Chief Justice of Pakistan Justice Iftikhar Muhammad Chaudhary, TIP Chairman Syed Adil Gilani said that today the media has published Asian Development Bank's (ADB) report on the RPP project with such captions as 'Post-bid changes benefited sponsors: ADB issues final report on RPPs'. This report is also available on the GoP website.
Transparency International Pakistan has pointed out to the government on various occasions for last 8 months that there is a lack of transparency in the award of rental power plant projects. The ADB report has listed several reasons for suggesting the government discontinues establishing RPPs in their present form.
ADB has also advised that the procurement of 14 RPPs should have been re-tendered due to changes in the terms offered to bidders, after the tenders were opened. This amounts to mis-procurement and violation of Public Procurement Rules 2004, as declared by Transparency International Pakistan in August 2009.
THE ADB REPORT STATES IN CLAUSE D, PROCUREMENT PROCESS, S NO 2: "RFP included 7% down payment along with irrevocable confirmed SBLC guaranteeing the payment by the buyers. Substitution of confirmed SBLC with government guarantee and increase in down payment changes the financial, equity and project risk profile in favour of the seller. Changes in down payment post receipt of bids is the major change in the financial terms and contractor to good practice and there should have been re-tendering on the changed conditions."
Supreme Court in the case of Pakistan Steel (PS) privatisation, in its judgement announced on 9 August 2006, dealt with similar case, adjudicated the following: However, the process of privatisation of Pakistan Steel Mills Corporation stands vitiated by acts of omission and commission on the part of certain State functionaries reflecting violation of mandatory provisions of law and the rules framed thereunder which adversely affected the decisions qua pre-qualification of a member of the successful consortium (Mr Arif Habib), valuation of the project and the final terms offered to the successful consortium which were not in accord with the initial public offering given through advertisement.
For the foregoing reasons, the Letter of Acceptance (LoA) dated 31st March, 2006 and Share Purchase Agreement dated 24th April, 2006 are declared as void and of no legal effect." TIP is of the view that acts of omission and commission in the award of RPPs are in clear violation under the PPRA Ordinance 2002 of the Public Procurement Rules 2004, and should therefore be considered as corruption and fraud practices. The bidder should be fined 10 times the loss to GoP due to corruption under Rule No 7 of the Integrity Pact, and cases should be initiated under NAO 1999, against the public office holders involved in these contracts.
"Your honour, TIP on January 20, 2010 requested the Minister for Water and Power to take strict action against PPIB, Pepco and RPPs owners who collectively violated public procurement rules, but no response has been received from the Minister," Gilani said in the letter. According to TIP, if these projects are allowed to be implemented, they will cause loss of hundreds of billions of rupees to the country in perpetuity and ruin industry resulting in massive loss of jobs.