MUZAFFARABAD: A new controversy has surfaced in the ranks of Peoples Party led government in Azad Jammu and Kashmir (AJK) following the award of a Rs7 billion contract of a hydropower project, with senior minister Chaudhry Mohammad Yasin publicly questioning transparency of the process and Prime Minister Chaudhry Abdul Majeed defending the decision.

On July 4, AJK Power Development Organisation’s (PDO) authoritative board decided to award the contract of the 48-megawatt Jagran-II hydropower project in Neelum Valley to M/S China International Water and Electric Corporation (CWE), as they were considered the “responsive lowest bidder”.

Agence Française de Développement (AFD) pledged a €68 million loan for the project, while the PC-1 of the project was approved by Executive Committee of the National Economic Council (ECNEC) at a cost of Rs7 billion.

The Rs7 billion hydropower contract was awarded on merit, asserts prime minister

The decision was taken by the board on the basis of a vote, reportedly after Chief Secretary Khizar Hayat Gondal warned that any further delay could result in a withdrawal of funding by the donor.

Mr Yasin, who is the minister in charge of PDO, alleged that the decision was controversial and reflected the opinion of only a minority of members.

During the meeting, which was the tenth on this issue over the past eight months, four board members, including Mr Yasin, voted in favour of M/S Sinohydro, while two expressed serious concerns on the transparency of the entire bidding and evaluation process, calling for invitation for fresh bidding.

Five members, including the minister for finance Chaudhry Latif Akbar, voted in favour of M/S CEW. The prime minister also threw his weight behind them.

Since then, Mr Yasin has been questioning the transparency of the process. Lately, he sent a strong worded ‘note of dissent’ to all board members.

According to this note, available with Dawn, the decision will cause a colossal loss of Rs400 million in the beginning, leaving aside the cost of escalation due to hidden clauses of the bid.

“The transparency and the right of merit have been compromised and irregularities have been officially patronised by those who favoured the second-lowest bidder,” he said.

Going over the process of pre-qualification and evaluation of bids, Mr Yasin accused the MD PDO of committing professional dishonesty by taking sides with one particular group; in this case, CWE.

Apart from citing some other “glaring examples of favouritism”, he also picked holes in AFD, saying that it was prompted by the MD PDO to issue a loan cancellation threat in case the bid evaluation report was reviewed.

On the other hand, brushing off the allegation, PM Majeed emphatically stated that the contract has been awarded on merit. “Whatever decision was taken by the board was purely on merit, in favour of the lowest pre-qualified responsive bidder. I have a satisfied and clear conscience in this regard,” he told Dawn.

He added that M/S Sinohydro had already been considered non-responsive by the concerned committee.

Referring to senior minister’s dissenting note, Mr Majeed said, “It is an opinion of a board member which can be respected, but not agreed with, as it is based on false assumptions.”

Interestingly, PDO, which falls under Mr Yasin, has separately issued a clarification about the award.

A PDO official told Dawn that as per the loan agreement between Islamabad and the AFD, the implementing agency, PDO, has to seek prior approval of the donor agency for every event of hiring of Engineering Procurement Contract (EPC).

The official, who spoke on condition of anonymity, asserted that when the evaluation committee’s recommendations were forwarded to the AFD for a no-objection certificate, it decided to award the contract to the lowest responsive bidder, M/S CWE, after detailed deliberations and discussions with their headquarters in Paris.

He said that the claim about difference of Rs 400 million in bids was also mere eyewash.

The official disclosed that Sinohydro’s joint venture - Habib Rafique – had submitted a false affidavit with the PDO regarding its past performance, which also went against it, rendering it suspicious in the eyes of the donor.

It may be mentioned here that PDO, which was earlier known as Hydro Electric Board (HEB), was initially allotted to Mr Yasin in April 2012, but withdrawn from him in October 2013 and given to Mr Akbar. However, in March this year, it was given back to Mr Yasin.

Published in Dawn, July 14th, 2014