Daily Times

ISLAMABAD: Irregularities of billions of rupees have been found in the award of contract for construction of Karachi-Multan-Lahore motorway to a Chinese firm, after the approval of ousted prime minister Nawaz Sharif and indicted Finance Minister Ishaq Dar.

According to revelations made in a report by auditor general of Pakistan (AGP), the feasibility study for the project was prepared by the China State Construction Engineering Corporation (CSCEC), as assigned by the then prime minister Nawaz Sharif at a meeting held on August 30, 2013. The Rs 259.353 billion PC-I of the Sukkur-Multan section (392 km) was approved by the Executive Committee of National Economic Council (ECNEC), headed by Finance Minister Ishaq Dar at its meeting held on July 3, 2014.

The audit report reveals that the National Highway Authority (NHA) advertised tender for bidding for the project on turnkey basis and awarded the contract to the same company which had prepared the feasibility report earlier – CSCEC. However, the Chinese company later surprisingly increased the estimate to Rs 406.332 billion.

“The process of bidding among three nominated contractors started in June 2015 whereas approval to invoke Rule 5 of PPRA, envisaging exemption to the extent of open competitive bidding, was granted by the Economic Coordination Committee on August 12, 2015. The lowest bidder – CSCEC – quoted a sum of Rs 406.332 billion for the project, which was supported by mentioning cost against each item of bill of quantities (BOQ)/bidding documents,” the audit observed.

As per Rule 40 of PPRA Ordinance 2004, there shall be no negotiations with the bidder having submitted the lowest evaluated bid or with any other bidder. But NHA, for manifestation to the public, held negotiation meetings in the garb of rationalising the cost of the project.

The NHA argues that during the negotiations, cost of the project was lowered by deleting some scope of work amounting to the value of Rs 111.980 billion. The project was awarded to M/s CSCEC for Rs 294.352 billion by deducting Rs 111.980 billion from the Rs 406.332 billion, the authority says.

The audit report observed that the project of whose cost was estimated by M/s CSCEC at Rs 240.158 billion was awarded to the same contractor at the rates higher to the tune of Rs 166.174 billion.

“The rates quoted by M/s CSCEC were very much on higher side as compared to PC-I rates prepared by the same contractor in the feasibility stage (higher rates of Rs. 93.843 billion against 14 items for example),” the audit report read. “Basis for reduction/detailed calculations to arrive at the amount to be deleted from the total bid were not mentioned in the record in support of deletion of cost of Rs 111.980 billion against each deleted item/scope of work,” it observed. The audit report expressed reservations that Chinese company’s estimation in feasibility report was less than Rs 294.352 billion when all the items/scope of the work was same.

Expressing dissatisfaction over the response of the NHA, the audit questioned as to how the same company, whose estimation for project was Rs 259.353 billion, was awarded contract at rate of Rs 294.352 billion and that too after deletion of several items?

The audit, while observing other adjustments besides Rs 111.980 billion, has stressed upon investigation and appropriate corrective action in the matter.

Published in Daily Times, October 24^th 2017.