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NAB starts probe into allegations regarding Rs148.65 bn motorway project

By Usman Manzoor
July 22, 2016

ISLAMABAD: The National Accountability Bureau (NAB) has stepped in to probe the allegations of favouritism in Rs148.65 billion Lahore-Karachi Motorway project and if the allegations turn out to be correct then this would be a major scandal of the incumbent government. 

The Transparency International (TI) alleges that a loss of Rs14 billion is being incurred on the national exchequer because of the flawed bid but the National Highway Authority claims that it has saved Rs10 billion of   the nation while awarding this contract, documents reveal. 

On Thursday, the NAB ordered its DG Rawalpindi to investigate the allegations of Rs14 billion loss. The major allegations are of serious collusion on this project:  “M/s China Railway 20 Bureau has never completed a single PKR 91 billion project, and does not pass the qualifying criteria, similar to FWO. 

M/s China Railway 20 Bureau & ZKB have misrepresented their experience to NHA by using the experience of their mother company, and included in its experience the project of the mother company China Railway Construction Corporation Limited. 

In the pre-bidding process, bidders were clearly told not to reduce quantities or the level of profile (thicknesses) of the road, and also not to compromise on minimum material requirements. But M/s China Railway 20 Bureau & ZKB have submitted an undertaking that they will increase quantities during the progress of the project. 

Four bidders submitted bids (both technical and financial) on August 10, 2015 in single stage two envelope system. According to the provision of the bid as per Instructions to Bidders Clause 15.1 of the bid documents it was mandatory for all bidders participating in JV to submit the Bid Security in the name of Joint Venture. 

The Project Quantity as per Employer's Preliminary/Concept Design were much higher than those quoted by M/s China Railway 20 Bureau & ZKB, and BOQ 9 Item of estimated cost of Rs10 billion was not quoted. This bid of M/s China Railway 20 Bureau & ZKB, is a non-responsive bid. And all other bidders would have quoted at least Rs10 billion on an average for this bill No 9, but have been knocked out due to the nepotism and favouritism that NHA staff have for M/s China Railway 20 Bureau & ZKB. This disclosure of confidential information by the NHA staff in favour of China Railway 20 Bureau and ZKB is clearly a corrupt and fraudulent practice whereby the individuals from NHA and the contractor have clearly colluded which if remains unchecked will no doubt cause loss to the national exchequer.” 

The NHA in its response has replied: “China Railways 20 Bureau Group has executed similar work of Rs91 billion and fulfills the respective prequalification criteria. As per laid down procedure in bidding documents, the documents provided by the contractor, duly endorsed by Ministry of Foreign Affairs of China and countersigned by Counselor (CA) Embassy of Pakistan, Beijing were accepted. On the basis of these documents CR20G were pre-qualified. The other pre-qualified firms also submitted documents with similar authentication/endorsement which were accepted. 

This is an EPC contract which is not based on the quantities and rates as done usually in item rate contracts. EPC contracts are lump sum and fixed price contracts. In this case bids were invited on the basis of an outline design provided by NHA but a preliminary level design was required to be prepared and submitted by the bidders along with the bids. The bidders were allowed to suggest economical design, meeting board parameters set by the NHA in the employer’s requirements. During the bid evaluation process NHA carried out technical compliance study of all four bids through a third party consultant.

The results of study revealed that all four bidders submitted the bids based on their own preliminary design and non-binding quantities, but all bidders technically complied the employers’ requirements.” 

NHA brushed away the allegation that FWO pressurised NHA for this project saying PPRA rules didn’t allow such things. The NHA reply also mentions that quoting Rs14 billion loss everywhere is an attempt to grab attention which has no connection with reality.