Why did TTS fail to yield desired results?

Delay in TTS was mainly due to prolonged litigation, unnecessary demonstrations by company and delay in signing of the Tripartite Purchasing Agreement (TPA) with relevant sectors

By Our Correspondent
May 26, 2024
Headquarters of the Federal Board of Revenue in Islamabad. — APP/File

ISLAMABAD: The implementation of Track and Trace System (TTS) for gauging the real production of selected major revenue spinner sectors of the country failed to yield the desired results mainly because of alleged goal posts changed by the FBR high-ups since its conceiving idea.


In a background discussion with a selected group of journalists this week, the top sources argued that it was misconceived in the power corridors and the media that the TTS was a failed project. They said that in the case of cigarettes, only two multinationals complied with it and the remaining preferred to remain outside on account of different excuses.

In the case of cement sector, they said the FBR itself shared less production lines and it seemed that they allegedly hid the actual production lines. It was found through field surveys that there were 200 production lines but the FBR mentioned only 50 in its tendered documents.

The FBR on December 18, 2023, communicated to more than one dozen cement factories with regard to the implementation of TTS at one facility. In addition, the FBR communicated that Phase-1 of TTS was completed in the cement sector and ensured all the production lines at facilities were ready for installation as per the provisions of TPA by December 31, 2023.

The delay in the TTS was mainly due to prolonged litigation, unnecessary demonstrations by the company and delay in signing of the Tripartite Purchasing Agreement (TPA) with relevant sectors. The TTS comprised Authentix Inc, AJCL Private Limited and MITAS Ltd, a consortium that was awarded the project to implement it in four sectors i.e. tobacco, cement, sugar and fertilizer.

Former FBR chairman Tariq Bajwa-led Inquiry Committee also came down hard on the FBR for its incompetence in the implementation of TTS. The Bajwa-led committee report stated that the FBR was supposed to complete the project by February 2022 but litigation and court stays on implementation, bureaucratic inefficiencies and incompetence of FBR officials delayed the implementation of TTS.

A project director with a small team will not be able to deliver unless the whole of FBR, even the whole of government approach, is adopted, the report said.

For instance, the production lines were over 200 in the cement industry, whereas, the FBR just mentioned 50 in tendered documents, which shows an increase in production lines by a factor of four in the cement sector alone. The licensee has put up change orders in line with the provisions in the contract, pertaining to additional cost associated to outfit these additional lines, which are yet to be addressed by the FBR in two years.

Meanwhile, the FBR also directed the licensee to install the system on one production line each in the cement factory instead of rolling it out across the complete cement sector.

Commenting on this matter, the Tariq Bajwa-led committee stated that the solution efficiency is severely eroded by the continued operations of those production lines where the system is not implemented and was of the view that the FBR may direct licensee to implement TTS across the complete cement sector. “Contractual lapses on FBR’s side weakened the project governance and oversight and resulted in an inordinate delay in the resolution of outstanding issues between the licensee and FBR.”

The committee believes that despite the fact that the current technology solution has not achieved full results due to incomplete implementation, termination of the contract at this stage will trigger litigation and lead to prolonged delays in the implementation of the TTS, thereby, resulting in revenue slippages and evasion considering especially that FBR has not developed any in-house capacity and fallback plan to take over the system in case of termination of the contract.