LAHORE: Auditors have detected irregularities in the award of the engineering, procurement and construction (EPC) and operation and maintenance (O&M) contract for the establishment of the 100 megawatt (MW) solar plant of the Quaid-i-Azam Solar Power Private Limited (QASPL) to a private firm.
Auditor General of Pakistan’s (AGP’s) auditors found illegalities in the 2013-2017 audit of the company, according to an audit report.
The Punjab government’s subsidiary - QASPL- was established under the Companies Ordinance of 1984 in 2013 to build, own, operate and maintain the solar power plant in Bahawalpur. The company achieved commercial operation date on July 15, 2015 after the National Electric Power Regularity Authority granted generation license to it, which is valid till December 30, 2039.
The auditors found the management advertised the tender for the EPC and O&M contract for the plant in newspapers on Nov 1, 2013. The last date of submission of bids was Nov 19, 2013. The response time in the case was only 18 days as against minimum 30 days. Twelve parties, of 45, were prequalified for further process. After technical evaluation, three parties were shortlisted by the committee, whose financial bids were opened. Of them, M/s Chint stood the lowest with $206.281 million followed by M/s TBEA with $225.768 million. After opening of financial bids, the management started due diligence of the bidding documents. The consultants carried out due diligence of M/s Chint on March 21, 2014 and disqualified it without citing reasons. The due diligence process of the second lowest bidder i.e. M/s TBEA was carried on April 14, 2014 by the same consultant that recommended that EPC and O&M contract be awarded to the second lowest bidder. The contract with M/s TBEA was executed on June 2, 2014. The report says that due to rejection of the bid of M/s Chint, the company sustained a loss of $19.345 million.
“The audit sees the due diligence process started after technical and financial evaluation just to provide an opportunity to the second lowest bidder i.e M/s TEBA which was against the PP Rules. The irregularity was pointed out to the management on Dec 21, 2017 and other quarters concerned on Dec 23, 2017, but no reply was received till the finalisation of the report,” the report reads. “Audit required investigating the matter as to why the bidding documents were made in violation of the provision of Punjab Procurement Rules? Fix the responsibility,” it recommends.
Calling the appointment of the consultant (Emeritus) for Rs82.737 million irregular as having conflict of interest, the team observed that that Rashid Majeed was appointed consultant emeritus without any specific terms in a selective manner in the company on Nov 13, 2013. The officer attended the QASPL board of directors and finance and procurement committee meetings from Feb 15, 2014 to June 12, 2014. He was a member of technical and financial bid opening committee and managed to get the consultancy services for the EPC and O&M contracts in favour of the firm where he was the country head in Pakistan. He was also technical adviser of the Bank of Punjab (BoP), the lender bank of the QASPL. Thus, the officer took advantage and got the consultancy services awarded in non-transparent manner. Furthermore, the consultant not only provided vital information to his company but also to the other stakeholders.
“Audit is of the view that the consultant provided important and vital information to the company which created a strong case of conflict of interest. Hence, the entire expenditure of Rs82.737 million incurred on hiring of consultancy services is considered irregular and non-transparent,” the report reads.
The report recommended investigation into the appointment of the consultant emirates.
The audit team also found irregularities in hiring of services of foreign engineer for O&M services, provision of vehicles and other expense to energy department, payment of bonus to officers, appointments and payment of pay and allowances, payment to a company for additional services and site relocation allowance, loan agreement with the BoP on excessive payment of markup, opening of letter of credit in favor of parent company, purchase of old office equipment, retention of equity funds in the BOP, appointment of former CEO, hiring of independent technical consultants, adjustments of advances to the Bahawalpur district administration, hiring of a rent a car company, appointment of the CEO and excess payment of salary and gratuity, purchase of vehicles, expenditure without approval of the competent authority, LIBOR given on local loan, installation of solar panels and inverters, non-recovery of liquidated damages from a firm, loss due to non-calibration of backup metres, non-recovery of cost of electricity, non-imposition of liquidated damages, non-transparent award of consultancy contract, non-inclusion of insurance charges and tax refund in annual tariff, non-compliance of code of corporate governance rules and government instructions regarding verification of staff degrees, non-payment of the Punjab Sales Tax and non production of record.
Published in Dawn, March 24th, 2018