September 03, 2007	Monday	Sha'aban 20, 1428

LAHORE, Sept 2: Before increasing power tariff by 10-paisa per unit for financing the Neelum-Jhelum Hydroelectric Project, the government must scrutinise the tender and contract-awarding process by the Water and Power Development Authority which has increased its cost by billions of rupees, power sector experts and industrialists demand.

Speaking to Dawn on Sunday, they claimed that Wapda’s decision to grant the project to a single contractor instead of four, as was decided earlier, had increased the cost by Rs9.6 billion.

Since Wapda is short of finances to carry out the project, the federal government had decided to raise funds by increasing power tariff. Though the Economic Coordination Committee has temporarily deferred the decision at its recent meeting, there are all indications that the tariff will be enhanced presently.

“Why should consumers foot the bill for the follies (possible corruption) of the authority?” they asked. “If the current unit sale (around 75 billion) of Wapda is something to go by, it would burden the consumers with an additional Rs7.5 billion every year by increasing 10 paisa a unit”.

According to the details of the case, as reported by Dawn on Jan 28, 2007, the lowest financial bid opened on July 15, 2006, and subsequently finalised by the authority had put the total cost of the project around Rs90 billion.

Documents said the first and second lowest bidders had quoted electrical component of the same manufacturer — Harbin of China —- but different prices. The price quoted by the otherwise lowest bidder was higher by $160 million (Rs9.6 billion) than the one quoted by the second lowest bidder.

Since Wapda had decided to grant the contract to a single contractor instead of four different parties, which has been a standard practice in other similar projects, it would pay a higher price for the component, said the experts.

“The authority can benefit even more on price front if it splits the tender into four — electrical, mechanical, civil and hydrological works,” said Tanzim Husain Naqvi, a former member (power) of Wapda. The authority had always preferred splitting tenders even for smaller projects like Satpara Dam as it attracted more competition and lowered the price. But it had ignored that time-tested formula and went for single bidder in this particular case, the member pointed out.

Even by splitting the tender into two — electrical and the rest — it could save over Rs9 billion, a saving of around 14 months of additional charges. The government should certainly arrange funds for the project, but also try to keep the process transparent and as cheap as possible without compromising quality, he demanded.

“Apparently, a 10-paisa per unit increase should not be a big issue for the textile industry, but one needs to see it in the context of rumoured relief that the government was going to provide to the industry in the budget,” said Jawad Ihsan of Irfan Textiles. The industry had been living on the hope of some relief in the recent budget and instead it was being burdened with increase in tariff.

He said around 160 spinning units had already been closed down and 40 were expected to shut their operation in the current month. The knitwear industry had virtually collapsed and the rest was sprinting towards annihilation. In these circumstances, he said, it hardly made sense to increase power tariff without providing the industry relief on other fronts.

“The government must ensure prudent business practices in all tendering process,” demanded an official of the Wapda water wing. It had decided that tenders beyond Rs500 million would go to the National Accountability Bureau which worked as some kind of deterrent for rigging.

The Neelum-Jhelum project also needed to come under scrutiny before burdening the people in any way, he demanded. — AHMAD FRAZ KHAN