ISLAMABAD - A Chinese company, blacklisted in railway locomotive deal, has been the major contractor in many multi-billion power generation projects, raising serious questions on the quality and timely execution of these crucial projects.
Chinese Company DongFang first came into limelight in Pakistan when it struck a deal to provide locomotives commonly called railway engines to the country, during General Pervez Musharraf’s regime. As many as 69 locomotives from China were purchased for $98 million, which later developed technical faults.
It was alleged that heavy kickbacks were involved and quality and other specifications of the locomotives were criminally ignored just for the vested interest.
In this scam, NAB investigated former top government functionaries, including former Federal Minister for Railways Lt General (retd) Javed Ashraf Qazi, former Chairman of PR Lt Gen (retd) Saeed-uz-Zafar, Major General (retd) Hamid Hasan Butt whereas General Manager of Operations Saeed Akhtar were arrested, along with general manager and an additional general manager of Pakistan Railways for their alleged involvement in the scam.
These engines could run on the tracks for some time and were grounded due to development of serious technical faults.
During the National Assembly proceedings on March 4, 2005, the government had told the National Assembly that locomotives bought from China had gone wrong on Pakistani tracks and remaining orders under the deal could be cancelled if defects including under-frame cracks, were unable to be rectified.
It is part of the record that then Railways Minister Shamim Haider said Pakistan Railways had suspended the reassembly of eight Chinese diesel engine locomotives and asked China’s DongFang Electric Corporation to stop the delivery of the remaining 38 machines out of the total 69 contracted till the issue was resolved.
Some other cases regarding DongFang surfaced and finally due to a history of bad reputation, the present government blacklisted the company and informed Public Procurement Regulatory Authority (PPRA) about its decision.
PPRA blacklisted the company on May 21, 2013, and uploaded the information on its website as a warning for other companies not to carry out business with the company.
According to PPRA officials, the grounds for blacklisting DongFang were her failure to fulfill the contractual obligations and solve the chronic technical problems against the contract agreement.
PPRA is an autonomous body and its mandate is to prescribe regulations and procedures for public procurements by the federal government owned public sector organizations with a view to improve governance, management, transparency, accountability and quality of public procurement of goods, works and services.
On one side when DongFang was exposed in PR, it continued to work with other departments of the country.
These projects are mainly in the power generation sector. Out of many projects, DEC is still working on Nandipur power project, first 100MW phase of which was inaugurated by the prime minister in May this year.
Nandipur is a 425MW power generation project and it has to be completed in next seven months. The latest project cost is calculated around Rs.59 billion.
The project is already delayed almost by three years, due to political reasons, hiking its cost from Rs.23 billion to 59 billion approximately.
As soon as the project was inaugurated it developed some serious technical faults and had to shut it down, immediately, sources revealed to The Nation. They raised serious questions about the productivity of the completed project.
The Nandipur Power Plant management while talking to The Nation admitted that the plant was contributing zero electricity to the national grid but termed it due to high cost of diesel.
“It is wrong that the project was shut due to technical reason, but it was shut down due to high cost of diesel”, said an official of the plant management.
“We have written to PM and if allowed to run it on diesel, we would start it on a three hours notice,” he added.
Answering a question about the reputation of DongFang, a top manager said that the company has deposited a bank guarantee and if any of the machines don’t work according to the specifications of the tender, that guarantee would be seized.
The management said that second phase of the project would be completed next month and by that time they would be trying hard to run the plant on furnace oil.
The sources believe that although the company has deposited a guarantee but if would be very difficult for the Pakistan’s political government to seize the guarantee, as it could complicate two countries relations.
DongFang is working under direct administration of the Chinese Central Government.
When PPRA was contacted for comments as to why the blacklisted company was working on other big and crucial projects in the country, the PPRA spokesperson Waqar Hussain told The Nation that after completing all procedures any company is blacklisted and PPRA ensures that the company has given a fair chance to explain its position.
Hussain, however, said that there is no mechanism to communicate this blacklisting to other government departments.
“We upload list of all blacklisted companies on our website and expect government departments not to do business with those companies,” he said.
He said in tenders, the government departments mentioned that only those companies are eligible to apply who are not blacklisted with any government organization especially PPRA.
The Ministry of Water spokesperson told The Nation that DongFang was blacklisted in 2013, whereas the Nandipur project was awarded in 2009.