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Govt mulls scrapping procurement rules

Updated Jun 06, 2014 01:56pm


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The Ministry of Water and Power has entered into several MoUs with the foreign investors for the development of power projects and infrastructure on a BOO and BOOT basis. - File photo
The Ministry of Water and Power has entered into several MoUs with the foreign investors for the development of power projects and infrastructure on a BOO and BOOT basis. - File photo

ISLAMABAD: The government looks set to withdraw certain powers of the Public Procurement Regulatory Authority (PPRA) in order to bypass competitive bidding for procurement of goods, services and international contracts.

Sources tell Dawn that the move is ostensibly aimed at facilitating Chinese and Middle Eastern companies who are interested in investing in Pakistan.

According to a summary submitted to the federal cabinet’s Economic Coordination Committee (ECC), the PPRA Ordinance of 2002 would be amended to grant the government blanket powers to award any contract or procure any goods or services without having to conduct a ‘transparent’ bidding process.

The proposed amendments would empower the federal government to opt for unsolicited proposals or work with pre-negotiated agreements. The amendments are so broad-based that without these powers, insiders say, the PPRA would become “practically useless”.

Move will allow govt to procure goods, services from any firm it chooses

If the amendment goes through, the government will be able to bypass any bidding process, not simply under special circumstances and in cases of emergency, but also in ‘the public interest’.

An official told Dawn that these stipulations are so broad that they render the regulatory authority all but redundant.

The summary states that: “Under the PPRA Ordinance 2002, the federal government may, as and when it considers necessary, issue directives to the authority on matters of policy, and such directives shall be binding on the PPRA authority”.

An official told Dawn the amendments had been proposed to facilitate large investors from China and the Middle East.

To ensure implementation, the PPRA Rules 2004 would also be amended thus: “The PPRA rules should provide for admissibility of unsolicited proposals which are (i) approved by the federal government bringing best value for money, (ii) due to unusual and compelling urgency and (iii) in view of the public interest”.

Under these amendments, the government would be able to convert MoUs, signed with a number of state-run Chinese companies, into formal agreements to ensure the swift implementation of energy sector projects on a build, own and operate (BOO) or build, own, operate and transfer (BOOT) basis.

The same relaxation could also be utilised to finalise a deal with Qatar for the import of Liquefied Natural Gas and some coal-based power projects being pursued by former Ehtesab Bureau Chief Saifur Rehman.

The summary states that the Ministry of Water and Power “has entered into several MoUs with the foreign investors for the development of power projects and infrastructure on a BOO and BOOT basis”, adding that the amendment was required to ensure private sector investment in the country.

It proposes that the “scope and applicability of the PPRA rules should exclude procurements where private sector financing, export credit scheme, concessional credit, suppliers or buyers credit, BOO, BOOT modes are involved as they do not include recourse to public funds and public procurements as defined under the PPRA Rules”.

The summary also proposed that pre-qualified parties that could develop power projects and transmission and infrastructure facilities through their own resources should be invited for direct contracting.

It said the section 42 of the PPRA rules already provides that when the prices of goods, services or works is fixed by the government or any other authority, agency or body duly authorised by the government on its behalf, direct contracting be utilised by a procuring agency.

It said this position should be amended to bring more clarity to the role of Nepra, being the exclusive regulator of the power sector.

Published in Dawn, June 6th, 2014


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Comments (3) Closed

Ishrat salim Jun 06, 2014 02:17pm

If we have no money to invest on our own, but other party is interested to invest then such an step.becomes necessary without which no foreign investment will come forth.......

Shabbir Jun 06, 2014 03:27pm

Bidding will now be in a different shape... Companies who bid to pay the highest commission will get the blessing of the Govt in the form of Overpriced MoUs and Contracts. If there is no transparency in the procurement process it is an open field for corrupt bureaucrats to take bribes and commissions.

hakim Jun 06, 2014 09:21pm

A better way to deal with this situation is to simply remove PPRA for a few years.