ISLAMABAD: Corruption continues to weaken Pakistan International Airlines (PIA), and this time it is the food department which is causing loss of billions of rupees due to delay in awarding contracts for the purchase of food supplies.

According to Transparency International Pakistan (TIP), which has been participating in PIA’s tendering process since October last, the national carrier’s Managing Director Captain Muhammad Junaid Yunus has been requested to institute an inquiry into three recent tenders where savings of millions of rupees have been put at stake due to hurdles created by old suppliers in collusion with PIA user department.

In a letter to MD PIA, TIP adviser Syed Adil Gilani cited three cases of alleged corruption and stated that these be dealt against suppliers and users under Rule No 2 (f), “corrupt and fraudulent practices” includes collusive practices among bidders (prior to or after bid submission) designed to establish bid prices at artificial, non-competitive levels and to deprive the procuring agencies of the benefits of free and open competition.

In most of the cases, it was noticed that in past PIA has been awarding many contracts to same suppliers/contactors for 10 to22 years continuously. Like edible oil supply to PIA from 2000 to 2004 was only Dalda oil by an agent of a multinational company, and when the multinational company sold Dalda in 2004, PIA switched from Dalda to another oil brand and has been buying on single tender basis since then with same agent.

TIP in 2013 advised PIA to send the tenders to all oil manufacturers for fair competition. Three bids were received in January 2013, in which one bid was non-responsive, the lowest bidder Pakistan Oil Mills quoted Rs21,868,035 and Unilever Pakistan quoted Rs25,565,960. PIA got advantage of Rs3,697,925 – 17 per cent lower than Unilever Pakistan.

However, the food department delayed the reports on one pretext or the other, raising unsubstantiated objections on product quality. It was reported that PIA was buying from Pakistan Oil Mills for Airport Hotel since many years, and the same oil brand was also supplied to Sheraton Hotel. However, PIA’s General Manager Food Hanif Rana has been raising false objections.

On TIP’s intervention and complaint, finally on March 28, PIA awarded the contract to the lowest evaluated responsive bidder Pakistan Oil Mills and was saved from loss of Rs3,697,925.

Similar is the case of juices, PIA has been buying juices in past only from a local company, Shezan. In competitive tendering in January 2013, Popular Food quoted Rs44,128,670 and Shezan quoted Rs53,906,080. Lowest bidder was Rs9,777,410 lower – 22pc saving.

In this procurement too, Rana objected on the quality and other issues without documentary evidence. On March 28, 2013 the contract was awarded to the lowest evaluated responsive bidder Popular Food and saved Rs9,777,410.

One other case is of the food supplier at Air Hostess Hostel in Karachi, the current supplier has been around for 22 years. During the 2013 tendering, he got letters of recommendation from 48 airhostesses so that he could be awarded. However, when PIA delayed awarding the contract to the lowest bidder, the old supplier got a stay order.

Another case is of the tender for hiring of transport rental services for PIA cabin crew Islamabad-Lahore-Karachi route. Same company ALS has been PIA contractors for seven years, with old vans. The company has been awarded the contracts for the past 17 years, is Islamabad-Lahore-Karachi sector.

In February this year, tender for Lahore and Islamabad, 20 buses each, Shani Travels, quoted Rs332,560,000, and ALS quoted Rs394,560,000. Thus PIA is saving Rs72,000,000, which is 21.6pc lower than the second bidder.

A number of objections have been made by PIA user department on the new supplier under pressure for 17 years old supplier. The contract has still not awarded, and is reported to be sent to PIA board for approval in its meeting scheduled for 4 April 2013.

TIP asked PIA managing director to ensure that the contract is awarded to the lowest bidder who will supply brand new vans as per tender requirement.