NHA denies ‘irregularities’ in award of Multan-Sukkur Motorway contract

The News stands by its story

By Our correspondent

ISLAMABAD: National Highway Authority (NHA) has claimed that Multan-Sukkur Motorway project was processed and awarded as per the prevalent rules and regulations with total transparency and there is no question of violation of any rule in this regard.

In a statement issued here on Thursday, NHA in response to certain media reports about alleged " irregularities" in the award of Multan-Sukkur Motorway, clarified that the contract of the subject project was processed and awarded as per the prevalent rules and regulations with total transparency and there is no question of violation of any rule in this regard.

Multan-Sukkur Motorway (M-5) is the flagship project of China-Pakistan Economic Corridor (CPEC). The project is included in the Framework Agreement signed between government of People’s Republic of China and government of Islamic Republic of Pakistan and is funded by China. This agreement envisaged bidding between constructors nominated by Chinese government and the project to be implemented on EPC basis. Accordingly, bidding was carried out between three nominated bidders and procurement was conducted in accordance with PPRA Rule-5 which envisages precedence of international agreements over local laws.

Following the detailed technical and financial evaluation, M/s China State Construction Engineering Corporation emerged as the lowest evaluated bidder with original bid price of Rs406 billion. It is not true that original bid price was Rs240 billion and was increased subsequently. Discussions with the lowest bidder were held on the original bid and the alternate bid (submitted by the lowest evaluated bidder along with the original bid). The submission of alternate bid was as per the standard practice of Pakistan Engineering Council and provisions of bidding documents.

Under EPC mode, bidding is carried out on the basis of Employer’s requirements which list down the broad parameters of the infrastructure facility that is to be constructed. The bidders’ carryout their own preliminary design that meets the Employer’s requirements and submit their bids accordingly. Therefore, clarification meetings with the lowest evaluated bidder are a norm for optimizing the scope and ultimately the price. It is also pertinent to highlight that no grievance was ever raised by any participating bidder.

The contract was finalised at the rationalised bid price of Rs294 billion envisaging exemption of duties on import of construction equipment / materials. For this purpose, the bid price was reduced to the tune of Rs19 billion. The PC-I of the project was revised on the basis of finalised bid and approval of ECNEC was obtained prior to signing of Contract Agreement. This approved PC-1 included exemption of above mentioned duties.

The case for approval of exemptions was initiated simultaneously; however, it took considerable time in the approval process as many stakeholders like FBR, Ministry of Finance, etc were involved. The provision of exemptions was not the first instance as similar exemptions were earlier granted on other mega projects including Lahore Islamabad Motorway (M-2) and Peshawar Islamabad Motorway (M-1). A reduction to the tune of US $200 million in project cost was achieved against this exemption which was duly approved by ECNEC and ECC.

Mehtab Haider adds: This correspondent stands by its story as it covered proceedings of the Senate Standing Committee on Finance so the NHA should make efforts to satisfy Parliamentarians instead of issuing press statement.