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LAHORE: Following recommendations in an initial report, the Lahore Development Authority (LDA) administration has ordered a fact-finding inquiry into the alleged irregularities in awarding of contracts for carrying out infrastructure-related works in the LDA City housing project.

The administration has also appointed the additional director general (headquarters) as inquiry officer, directing him to submit a report within 10 days.

The LDA had launched the housing scheme a few years ago and planned to develop it on 60,000 kanal in two phases. The authority took up phase-I comprising about 31,000 kanal by approving its PC-I amounting to Rs33.66 billion based on the engineer’s cost estimate in a meeting held on July 10, 2017. The administrative approval was notified through a letter dated Aug 9, 2017.

“Tenders were invited from the pre-qualified contractors on Sept 28, 2017 for execution of road infrastructure in the available areas of phase-I based on estimates prepared on the engineer’s cost template. The lowest bid offered by M/s Alam Khan Brothers amounting to Rs867.658 million was accepted which was 3.77 per cent above the estimated cost of Rs836m,” reads a report submitted to LDA’s director general recently.

The report alleges that the contract awarded to Alam Khan Brothers was later enhanced from Rs867.6m to over Rs2.2 billion by the then LDA chief engineer through a letter dated Jan 18, 2018 by incorporating changes to road works and adding water supply and sewerage networks.

It also mentions that during examination of the past and ongoing tasks of the project, especially in the context that land matters at LDA City housing scheme are being probed by the National Accountability Bureau, it has been noticed that serious irregularities were committed initially while seeking approval from the authority for infrastructure development works which consequently led to defective award of contract followed by unauthorised enhancement of the agreement.

The report claims that market rate schedule (MRS) published by the finance department is adopted by all development authorities under the administrative control of Punjab government for preparation of bill of cost estimates of development schemes. For technically complex projects to be executed under specified, compressed physical conditions, an engineer’s cost template is exclusively adopted only after the approval of a summary by the chief minister.

The Punjab government’s financial rules are equally governed and applicable to LDA-funded schemes which, in the instant case, have not been adhered to.

“Infrastructure development comprising common-natured work components in wide and open areas of LDA City project, which is free of urban congestion and obstructions from services/utilities, do not require adoption of engineer’s cost template having no justification at all, nor the authority was the competent forum to accord approval to the engineer’s cost estimate without approval of a summary by the chief minister. Prima facie, it reveals that the authority was not informed about the financial rules and procedure in this case, thus, approval was obtained deucedly on higher rates by keeping the authority in darkness,” the report reads.

Cost impact for the engineer’s rates versus MRS was not presented to the authority which was on the higher side. This action has made the approval unauthorised and requires to be addressed through accord of revised administrative approval on MRS-based estimates.

“Keeping in view the serious consequences of enhancement of the contract agreement on unauthorised engineer’s rates… the undersigned has withdrawn the enhancement agreement, as a corrective measure, to preempt further loss to the government’s treasury,” it said.

The report also recommended a thorough probe into the issue besides preparation of a revised PC-1 on MRS-based estimates.

Published in Dawn, July 29th, 2018