Pepco’s sister company justifies deal
August 04, 2010
LAHORE: In what could well turn out to be a Rs698 million tendering scam, the National Transmission and Dispatch Company (NTDC) has awarded a Rs1.66 billion contract for an Asian Development Bank (ADB)-funded project in Lahore to the second highest bidder by rejecting the lowest offer of Rs962 million.
NTDC, a sister concern of Pakistan Electric Power Company (Pepco), had offered tenders for a project involving design, supply and installation of a Static Var Compensator (SVC) at Lahore’s new 220 KV Kot Lakhpat Grid station.
The tenders were opened on February 13, 2010. The NTDC Comparative Statement (CS) document of February 13, 2010, available with The News, shows that the following five international bidders had submitted the following bids with Read-Out prices (in brackets):
1) The Consortium of Messrs Siemens (Rs1.87 billion). This was the highest offer floated by any of the five companies which had qualified for this bidding process.
2) The successful Consortium led by the Swiss-Swedish conglomerate Messrs Asea Brown Boveri (ABB) had offered the second highest bidding price of more than Rs1.8 billion.
3) Messrs Rong Xin of China (Rs1.22 billion).
4) Messrs CATIC Beijing of China (Rs967.05 million) and
5) Messrs CEPRI of China (Rs962 million). This firm was the lowest bidder.
Another document available with The News reveals that about a week ago on July 28, 2010, the NTDC hierarchy has written a recommendatory letter to the funding agency ADB, whereby requesting the funding institution to allow the second highest bidder Messrs (ABB) to execute Rs1.66 billion deal.
Interestingly, Messrs ABB had given an initial offer of Rs1.8 billion, as seen in the afore-mentioned Comparative Statement document of February 13, 2010, but this offer price was later corrected and brought down to Rs1.66 billion by NTDC.
According to this letter, bearing Reference Number 952630/CE/EHV-I/DM-II and addressed to the Manila-based ADB on July 28, 2010, the NTDC Board of Directors had accorded approval to this contract to Messrs ABB in its meeting held on 26-7-2010.
The second paragraph contains details of the Rs1.66 billion bid price offered by Messrs ABB. Sent through ADB’s Resident Mission in Islamabad, this letter further states that Messrs ABB has emerged as the lowest responsive evaluated bidder by offering a price of Rs1.66 billion, which comprises of 56,606,524 Swedish Krona, 6,324,883 Euros and Pakistani Rupees 266,724,645 (including Rs80 million provisional sum).
The last paragraph of this letter states, “Tender Number ADB-14-2010 was called by this office under ADB loan number 2289. The tender was purchased by 10 firms, out of which only five had submitted their bids. The tender was opened by the Tendering Opening Committee on 13-2-2010. The technical and financial evaluation of bids was carried out by Chief Engineer (Design) NTDC. In the light of the above, the ADB is requested for award of subject project in favour of M/s ABB Consortium at their evaluated bid price stated above.”
The distressed lowest bidder in the above-mentioned list, Messrs CEPRI of China, has pledged to formally urge the ADB in writing to investigate into what it dubs a ‘blatant violation’ of the tendering rules by the NTDC.
Talking to The News, Messrs CEPRI’s Pakistani Representative Tahir Sultan said, “Instead of contesting this case in media, we will knock the ADB doors against this injustice meted out to us by the NTDC. In the past too, we had requested ADB to probe and intervene in a few matters. This time, we will again leave no stone unturned while fighting for our right. But if we take this matter to the media, it will affect our business ties with NTDC. We are the lowest bidders and hence deserve the contract.”
Earlier, Tahir Sultan’s son Tayyeb Sultan had avowed, “From buying a tender to filling it with the help of experts and then submitting it, the process costs hundreds of thousands of rupees. They have rejected us illegally. Neither have they informed us of their decision, nor have they furnished any plausible reason for our rejection.
Requesting anonymity, the local representative of another unsuccessful bidding company viewed, “From buying a tender to filling it with the help of experts and then submitting it, the process costs hundreds of thousands of rupees. They have rejected us illegally. Neither have they informed us of their decision, nor have they furnished any plausible reason for our rejection The NTDC management has violated the law by adjusting the bidding price of the successful bidder from Rs1.8 billion to Rs1.66 billion, after the Comparative Statement was issued on the tender opening day of February 13, 2010.
After the offers of all the five international bidders for this project were read out then, the prices quoted by any bidder were not adjustable. This is clearly mentioned in the Instructions To Bidders (ITB) Number 18.6, which was part of the tender document.”
The representative further stated, “The NTDC top brass has also committed yet another violation of the laid out rules by awarding the contract after the expiry of the bid validity period. While Instructions To Bidders Number 20.1 on the tender document explicitly mentions that the bid validity period shall last for 120 days only, Instruction Number 21.1 states that a bank guarantee of $ 0.64 million or Rs53 million will be valid for only 28 days beyond the validity period. So this makes a total validity period of around 150 days, which has expired by July 10, 2010.”
The representative went on saying, “In this classic case of law breach, the NTDC management has never bothered to ask the bidders to furnish fresh bank guarantees. Instead, nearly three weeks after the expiry of the validity periods of all the received bids, this department working under the Ministry of Water and Power has formally announced the successful bidder through its July 28, 2010 letter to the Asian Development Bank.”
Responding to the allegations leveled by the two aggrieved Pakistani representatives of the unsuccessful foreign firms, the NTDC Chief Executive Rasul Khan Mahsud maintained, “It is true that we have decided to award the contract to a European company Messrs ABB, which had otherwise emerged as the second highest bidder on the tender opening day. It is also correct that instead of opting for the lowest bidder, we will now go with a firm which has quoted an offer that is Rs698 million more than the lowest bid price received,” he held.
“But after carrying out two evaluations after the tendering opening, we have found out that the design and the product specifications which we actually need for this project can only be furnished by Messrs ABB. Therefore, the three Chinese and a German company have been disqualified after tender opening, for not fulfilling the tender specifications and have hence not been asked to renew their bid guarantees. We have sought a fresh bid guarantee from the successful bidder Messrs ABB within the stipulated time frame. I had also sought the opinion of University of Engineering and Technology before taking this decision.”
The NTDC Chief Rasul Khan added, “There is nothing illegal if the actual or corrected offer of a company is re-ascertained after evaluation. Yes, the ABB offer was Rs1.8 billion initially, but then we found out that the corrected offer was Rs1.66 billion. We have done nothing illegal and are open for scrutiny at every forum.”
Asked to give his viewpoint on this matter, the ABB Pakistan Chief Executive Waseem Khan remarked through an SMS from his cell number 0300-8454596, “I am not aware of this decision. However, there are only three companies in the world which have the technical expertise to undertake projects of such complexity. Out of these three concerns, two had participated in bidding and out of these two firms, ABB was the lowest bidder. Others do not have demonstrable capability to do the job. For further clarification, please refer to the documentation available with NTDC.”
NTDC, a sister concern of Pakistan Electric Power Company (Pepco), had offered tenders for a project involving design, supply and installation of a Static Var Compensator (SVC) at Lahore’s new 220 KV Kot Lakhpat Grid station.
The tenders were opened on February 13, 2010. The NTDC Comparative Statement (CS) document of February 13, 2010, available with The News, shows that the following five international bidders had submitted the following bids with Read-Out prices (in brackets):
1) The Consortium of Messrs Siemens (Rs1.87 billion). This was the highest offer floated by any of the five companies which had qualified for this bidding process.
2) The successful Consortium led by the Swiss-Swedish conglomerate Messrs Asea Brown Boveri (ABB) had offered the second highest bidding price of more than Rs1.8 billion.
3) Messrs Rong Xin of China (Rs1.22 billion).
4) Messrs CATIC Beijing of China (Rs967.05 million) and
5) Messrs CEPRI of China (Rs962 million). This firm was the lowest bidder.
Another document available with The News reveals that about a week ago on July 28, 2010, the NTDC hierarchy has written a recommendatory letter to the funding agency ADB, whereby requesting the funding institution to allow the second highest bidder Messrs (ABB) to execute Rs1.66 billion deal.
Interestingly, Messrs ABB had given an initial offer of Rs1.8 billion, as seen in the afore-mentioned Comparative Statement document of February 13, 2010, but this offer price was later corrected and brought down to Rs1.66 billion by NTDC.
According to this letter, bearing Reference Number 952630/CE/EHV-I/DM-II and addressed to the Manila-based ADB on July 28, 2010, the NTDC Board of Directors had accorded approval to this contract to Messrs ABB in its meeting held on 26-7-2010.
The second paragraph contains details of the Rs1.66 billion bid price offered by Messrs ABB. Sent through ADB’s Resident Mission in Islamabad, this letter further states that Messrs ABB has emerged as the lowest responsive evaluated bidder by offering a price of Rs1.66 billion, which comprises of 56,606,524 Swedish Krona, 6,324,883 Euros and Pakistani Rupees 266,724,645 (including Rs80 million provisional sum).
The last paragraph of this letter states, “Tender Number ADB-14-2010 was called by this office under ADB loan number 2289. The tender was purchased by 10 firms, out of which only five had submitted their bids. The tender was opened by the Tendering Opening Committee on 13-2-2010. The technical and financial evaluation of bids was carried out by Chief Engineer (Design) NTDC. In the light of the above, the ADB is requested for award of subject project in favour of M/s ABB Consortium at their evaluated bid price stated above.”
The distressed lowest bidder in the above-mentioned list, Messrs CEPRI of China, has pledged to formally urge the ADB in writing to investigate into what it dubs a ‘blatant violation’ of the tendering rules by the NTDC.
Talking to The News, Messrs CEPRI’s Pakistani Representative Tahir Sultan said, “Instead of contesting this case in media, we will knock the ADB doors against this injustice meted out to us by the NTDC. In the past too, we had requested ADB to probe and intervene in a few matters. This time, we will again leave no stone unturned while fighting for our right. But if we take this matter to the media, it will affect our business ties with NTDC. We are the lowest bidders and hence deserve the contract.”
Earlier, Tahir Sultan’s son Tayyeb Sultan had avowed, “From buying a tender to filling it with the help of experts and then submitting it, the process costs hundreds of thousands of rupees. They have rejected us illegally. Neither have they informed us of their decision, nor have they furnished any plausible reason for our rejection.
Requesting anonymity, the local representative of another unsuccessful bidding company viewed, “From buying a tender to filling it with the help of experts and then submitting it, the process costs hundreds of thousands of rupees. They have rejected us illegally. Neither have they informed us of their decision, nor have they furnished any plausible reason for our rejection The NTDC management has violated the law by adjusting the bidding price of the successful bidder from Rs1.8 billion to Rs1.66 billion, after the Comparative Statement was issued on the tender opening day of February 13, 2010.
After the offers of all the five international bidders for this project were read out then, the prices quoted by any bidder were not adjustable. This is clearly mentioned in the Instructions To Bidders (ITB) Number 18.6, which was part of the tender document.”
The representative further stated, “The NTDC top brass has also committed yet another violation of the laid out rules by awarding the contract after the expiry of the bid validity period. While Instructions To Bidders Number 20.1 on the tender document explicitly mentions that the bid validity period shall last for 120 days only, Instruction Number 21.1 states that a bank guarantee of $ 0.64 million or Rs53 million will be valid for only 28 days beyond the validity period. So this makes a total validity period of around 150 days, which has expired by July 10, 2010.”
The representative went on saying, “In this classic case of law breach, the NTDC management has never bothered to ask the bidders to furnish fresh bank guarantees. Instead, nearly three weeks after the expiry of the validity periods of all the received bids, this department working under the Ministry of Water and Power has formally announced the successful bidder through its July 28, 2010 letter to the Asian Development Bank.”
Responding to the allegations leveled by the two aggrieved Pakistani representatives of the unsuccessful foreign firms, the NTDC Chief Executive Rasul Khan Mahsud maintained, “It is true that we have decided to award the contract to a European company Messrs ABB, which had otherwise emerged as the second highest bidder on the tender opening day. It is also correct that instead of opting for the lowest bidder, we will now go with a firm which has quoted an offer that is Rs698 million more than the lowest bid price received,” he held.
“But after carrying out two evaluations after the tendering opening, we have found out that the design and the product specifications which we actually need for this project can only be furnished by Messrs ABB. Therefore, the three Chinese and a German company have been disqualified after tender opening, for not fulfilling the tender specifications and have hence not been asked to renew their bid guarantees. We have sought a fresh bid guarantee from the successful bidder Messrs ABB within the stipulated time frame. I had also sought the opinion of University of Engineering and Technology before taking this decision.”
The NTDC Chief Rasul Khan added, “There is nothing illegal if the actual or corrected offer of a company is re-ascertained after evaluation. Yes, the ABB offer was Rs1.8 billion initially, but then we found out that the corrected offer was Rs1.66 billion. We have done nothing illegal and are open for scrutiny at every forum.”
Asked to give his viewpoint on this matter, the ABB Pakistan Chief Executive Waseem Khan remarked through an SMS from his cell number 0300-8454596, “I am not aware of this decision. However, there are only three companies in the world which have the technical expertise to undertake projects of such complexity. Out of these three concerns, two had participated in bidding and out of these two firms, ABB was the lowest bidder. Others do not have demonstrable capability to do the job. For further clarification, please refer to the documentation available with NTDC.”
