ISLAMABAD: An audit of the Federal Board of Revenue (FBR) has pointed out Rs51.6 billion irregularities in a flagship project awarded to the National Logistics Cell without a tender process.
According to the audit report for the financial year 2021-22, over Rs35.08bn irregularities related to award of a contract for “Central Asia Regional Economic Cooperation, Regional Improving Border Services project for Torkham Border Crossing Point, on an engineering procurement and construction (EPC) basis, to the National Logistics Cell”.
“The FBR awarded the work directly to NLC without competitive bidding process and accepted the bid of NLC without detailed estimates and rate analysis to compare the bid rates,” the report added.
The FBR, in response to the audit objection, stated: “The project is financed by the Asian Development Bank and hence PPRA (Public Procurement Regulatory Authority) Rules are not applicable as superseded by the ADB procurement policy.”
Audit finds Torkham border crossing scheme awarded to NLC without tender
However, the Auditor General Office rejected the FBR’s reply. The audit report also pointed out that the FBR had paid a sum of Rs10.49bn to the contractor without proper verification. “Supervisory officer is required to record data-wise activity and mandatory tests at site. However, the payment for value of work was made to the contractor on account of work done without recording detailed measurement of work and prescribed checks by the engineers at various levels in support of the correctness of executed works were not exercised.”
The report also pointed out “unjustified payment” of Rs1.76bn due to inclusion of “superfluous components in the construction cost”.
As per the audit report, the FBR paid the extra amount as escalation cost without an Escalation Payment Certificate.
The audit also observed “excess payment” of Rs1.35bn which was beyond the provision of PC-1 of the project. The FBR tried to justify this with the depreciation of rupee against the dollar, but the auditors did not accept the reply and said the “expenditure has exceeded the permissible limits in different components of the project, which requires approval of the competent forum”.
The audit report termed the payment of Rs915 million to the contractor on account of provisional sum unjustified. “The amount was paid by the Project Management Unit for establishment of laboratories, shifting of utilities, environment management plan, security plan and demolition of existing building without supporting accounts, receipts, vouchers, etc,” it said.
The report said the FBR did not deduct Rs787.15m income tax from the contractor. The FBR replied that NLC has been exempted from payment of withholding income tax.
“The [FBR’s] reply was not accepted because withholding tax was included in the bid rates. Furthermore, the sub-contractors included in the contract agreement were also liable to pay the income tax,” the report observed.
According to the audit report, a sum of Rs478m paid to the contractor for security staff was also unjustified. It said the amount was paid to 124 and 146 security personnel, respective, at Torkham and Chaman borders.
“The consultant, however, reported that only 20 personnel were physically deployed on Torkham border for security, while NLC did not share any detail of personnel for both works,” the report said.
Published in Dawn, October 15th, 2022