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NHA refutes Rs1,000 bn corruption allegation in motorways construction: TI Pakistan

October 22, 2021
NHA refutes Rs1,000 bn corruption allegation in motorways construction: TI Pakistan

ISLAMABAD: Transparency International Pakistan has asserted that the National Highway Authority (NHA) has refuted its own minister Murad Saeed’s statement about alleged corruption of over Rs1,000 billion in NHA contracts awarded during 2014 to 2018.

In a letter, dated Oct 18, 2021, addressed to the secretary communications, TI Pakistan also reproduced a senior NHA official’s statement which lamented that, “Unfortunately, our higher-ups need to understand and should not make such statements. NHA Audit is done multiple times and no such issue is raised other than normal observations in routine.”

The TIP said that on this particular issue, the Prime Minister’s Citizen Portal on October 17, 2021, sent the following email to TI Pakistan: “Following officer (Member Planning, NHA HQ, Islamabad) closed your complaint (code IS151021-89208797) with the following status (‘relief granted’). Please see the remarks:

Officer remarks: Dear complainant, there is no corruption. NHA awarded all the contracts as per PPRA Rules following open bidding under wide circulation. All the bids are and were evaluated and bids are awarded to lowest bidder. Please note the awarded projects referred are an average of 15% below the estimates thus causing savings to national exchequer. Now in the current regime, due to COVID-19 and other economic factors, not much work was available for the first two years. Now when work is tendered, under demand and supply principle, the bidders are quoting minus 20 to minus 40 percent. The NHA again awarded the lowest evaluated bidder following the same procedures as followed earlier. Market dynamics change with time; we may see an upward trend in the future when work will be in abundance. Unfortunately, our higher-ups need to understand and should not make such statements. NHA Audit is done multiple times and no such issue is raised other than normal observations in routine.”

According to the TIP, the NHA reply to the PM’s Citizen Portal, and the acceptance by the PM’s portal of the NHA’s clarification and closing of the complaint, confirms that the minister of communications’ announcement was wrong. The minister had said that the motorway contracts awarded from 2013-2018 were at three times higher cost than the cost of motorway contracts awarded in 2020/21 under his ministership that caused a loss of over Rs1,000 billion due to corruption.

The TIP requested the secretary communication to update the prime minister that the statement of the minister alleging that motorway contracts awarded from 2013-2018 were three times higher in cost than the cost of motorway contracts awarded in 2020/21 under his ministership and caused a loss of over Rs1,000 billion due to corruption, was wrong.

The TIP said that following comments of TI Pakistan in its letter dated October 4, 2021, are proved correct by the NHA’s reply to the Prime Minister’s Citizen Portal.

A. The allegation of violation of PPRA Rules 2004, Rule No 47, is correct, and the NHA has not uploaded on the PPRA website the awarded contracts documents of all contracts, from 2013 to 2021, viz. BOQ, contract agreements, conditions of contracts, and specifications etc.

B. It is to be noted that the cost of construction for roads depends on various factors, such as design parameters, specifications, terrain/ filling/ cutting/ designed load/ embankment protection/ sizes of lane, depth of base and sub-base, carpeting thickness, culverts and bridges etc. The price escalation and rupee depreciation during the last nine years is also very high. The prices of MS bars in 2013 was Rs80,000 per ton, and in 2021 it is Rs145,000 per ton, and the US dollar vs Pak rupee rates in 2013 were Rs100 per dollar and in 2021 the US dollar is at Rs165, which has to be checked/ verified from the 2013 contracts of the NHA.

C. One example of this cost variation of road contracts due to design/ drainage structures/ terrain/ spec etc. factors, is in the two recently awarded contracts by NHA in 2021, for the construction of Ziarat Mor–Kach Harnai Road and Harnai–Sanjavi Road. The Ziarat Mor–Kach Harnai road is 109.882 km long and its contract is awarded at Rs2,404,338,786 which means Rs21.88 million per km. Whereas the Harnai–Sanjavi Road is 55.834 km long and its contract is awarded at Rs2,551,684,210 which means Rs45.7 million per km. This shows that the per kilometer cost for the Harnai–Sanjavi road is awarded at twice the price for per km cost for the Ziarat Mor–Kach Harnai road.

According to the TIP, the NHA’s reply dated October 17, 2021, also confirms that the two contracts were awarded in 2021 at 40 percent and 20 percent lower cost than NHA’s own engineers’ estimate of 2021, and not lower than the costs of the 2013 awarded contracts.

“This is also to inform the secretary that NHA has not updated the PPRA website, in compliance with Rule No. 47 of PPRA Rules 2004, for immediate posting of all motorway and other contracts under CPEC and non-CPEC awarded during 2013-2018 as well as during 2018-2021, along with rates/ prices quoted/ BOQ, on the PPRA website, which may kindly be expedited,” read the TIP letter.