TIP says PPRA rules violated in award of Mohmand Dam contract

ISLAMABAD: The anti-corruption watchdog -- Transparency International Pakistan (TIP) -- has called the award of Rs300 billion Mohmand dam to a Descon-led consortium on a single bid basis a violation of PPRA Rules.

In a letter to chairman of Water and Power Development Authority (Wapda) also copied to prime minister and the Supreme Court registrar, TIP listed a number of violations of the Public Procurement Regulatory Authority (PPRA) Rules in award of contract. The letter also questioned the credibility of the Chinese company -- the Gezhouba Group Corporation which has been allegedly involved in irregularities in World Bank and Nepal.

The contract is already facing a lot of controversy over “conflict of interest” allegations as Descon is owned by Adviser to the Prime Minister on Commerce Abdul Razzak Dawood.

The letter signed by Justice Zia Perwez- former judge of the Supreme Court of Pakistan and current trustee of Transparency International Pakistan - says TIP has received a complaint about violation of Public Procurement Rules 2004 on award of Rs300 billion Mohmand Dam to China Gezhouba, Voith Hydro & Descon on single bid basis.

“The complaint has been examined by TIP and prima fascia the award of contract of single bid amounts to mis-procurement under Rule 50. Any unauthorised breach of these rules shall amount to mis-procurement,” says the letter a copy of which is available with The News. The letters says that the Wapda issued tender documents for construction of the main dam in November 2017 and in response two bidders — CGGC/Voith-Descon joint venture and FWO-PC joint venture — submitted bids by June 26, 2018.

It says the Gezhouba Group Company has dubious background as the World Bank Group on May 29, 2015 announced the debarment of the company and its affiliates for a period of 18 months. In addition, China Gezhouba Three Gorges Engineering Co Ltd and its affiliates are also debarred for a period of six months.

The letter adds that on November 13, 2017, Nepal cabinet scrapped a $2.5 billion deal with China Gezhouba Group Corporation to build the country's biggest hydropower plant, on lapses in the award process.

Also on March 9, 2017, Wapda awarded Rs180 billion worth of two contracts to Chinese firm China Gezhouba Group Company (CGGC) for carrying out main civil works in the first stage of the Dasu hydropower project. But till today, no work has been started and contractor has made extraordinary claims.

“According to PPRA Rules 2004, single bid is not allowed to be considered, unless Wapda has awarded a contract on competitive basis, similar product, in same fiscal year, to another contractor, and the single bidder price is comparable to last awarded contract,” says the letter. The letter quotes example of a previous award on single bid basis which resulted in huge loss to national exchequer.

“LNG Terminal at Port Qasim was awarded in 2014 to single bidder, EPTL at tooling charges of $0.6601/MMCFD. This contract is presently under NAB inquiry, for alleged illegal award. The second LNG Terminal at Port Qasim was awarded in 2016 based on competitive bids, to JV of FOTCO and Gas Port at competitive price of tooling charges 0.4177/MMCFD. The result of competitive bid indicates that the actual market rate is 36 percent less than the rates of single bidder,” says the letter.

It says TIP noticed that Wapda has not posted on PPRA website the Evaluation Report on prescribed preform issued by PPRA according to Rule 35.

“Wapda chairman is requested to examine the complaint, in view or PPRA Rules, and also the credibility of China Gezhouba Group Company due to past irregularities in World Bank, Nepal and other contracts. In case the allegations are correct, cancel the tendering process, and re-invite the tender in compliance with PPRA Rules, and also take action against those who are found responsible for this alleged mis-procurement,” the TIP demanded.