MABAD The Auditor General of Pakistan in the audit report for the year 2009-10 has pointed out that rental power contracts were awarded without competitive bidding which cost national exchequer a loss of US $63.832 million.
Audit Report 2009-10 pointed out that three rental contracts were awarded in violation of Public Procurement Rules, 2004 causing loss of US $63.832 million to national exchequer due to higher rates of rental charges in unsolicited proposals. Moreover the matter needs to be expedited to fix the responsibility of the loss.
According to Rule 12(2) of the Public Procurement Rules, 2004, All procurement opportunities over two million rupees should be advertised on the Authoritys website as well as in the other print media or newspapers having wide circulation. Again, the advertisement in the newspapers shall principally appear in at least two national dailies, one in English and other in Urdu. Moreover according to Rule 50 of Public Procurement Rules, 2004, Any unauthorised breach of these rules shall amount to mis-procurement.
Audit Report 2009-10 of the Auditor General of Pakistan further explained in detail that in view of the severe energy crisis in the country, Government of Pakistan decided to launch rental power plants in order to eliminate loadshedding within the shortest possible time. Two rental services were awarded to M/S Alstom Power Rentals and General Electric Energy at contract price of US $103.016 million and US $113.620 million respectively without inviting tenders and advertisement in September 2006. The rate of rental charges was US 3.133 Cents per kwh in both rental power plants. Moreover, in comparison with the rate of rental charges awarded to M/S Pakistan Power Resources after competitive bidding was US 2.725 Cents. Hence, the rate of rental charges in case of unsolicited bid was in excess of 0.408 Cents than that of competitive bids. So due to excess rate of rental charges in unsolicited proposals, national exchequer suffered a loss of US $63.832 million.
Similarly National Electric Power Regulatory Authority (NEPRA) also took cognisance of the higher rates while approving tariff petitions. NEPRA further observed that Northern Power Generation Company Limited would be responsible for the loss. Moreover, another rental contract named Naudero-1 was also awarded on April 2, 2009 against unsolicited bid and it caused a loss of US $35.621 million to national exchequer.
Although the matter was taken up with the management on November 19, 2009 and subsequently discussed in the meeting held on December 19, 2009, yet the Economic Coordination Committee (ECC) of the Cabinet accepted these unsolicited bids on the proposal of Ministry of Water & Power which needed to be investigated to fix the responsibility for the loss.
Moreover, it is relevant to mention here that this issue was referred to the Ministry on December 21, 2009 and was also discussed in Departmental Audit Committee (DAC) meeting held on February 9, 2010. The management explained that there was a considerable gap between the solicited and unsolicited bids. Furthermore it was explained that NEPRA while deciding the rental charges of unsolicited bids suggested that in future the best course would be International Competitive Bidding (ICB).