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ISLAMABAD: A high-level departmental committee set up by the ministry of production will investigate a scrap deal by the Pakistan Steel Mills (PSM) that caused a loss of millions of rupees to the national exchequer, official sources told Dawn on Wednesday.
Tenders for the sale of steel scrap at PSM’s Yard No 22 were opened on Sept 16 last year. Amjad Traders offered the highest price of Rs92 million and was issued a letter of award. But the company failed to deposit the offered price and subsequently the earnest money of Rs1.84 million was forfeited.
The second highest bidder, Sheikh Enterprises, was offered to match the price which it did on March 31 this year. The company was issued the letter of award on April 4 and was asked to deposit the amount in full or avail the facility of 50 per cent in terms of L/C by April 21.
The company sought time till May 10 for signing the contract, citing problems in opening the L/C. The period was extended till April 30 and then May 10 with a warning that the earnest money would be forfeited after the deadline.
Sheikh Brothers missed both the deadlines, but was given another extension till May 27 on expiry of which the earnest money was forfeited.
Instead of re-evaluating the scrap and inviting a fresh tender, the PSM management accepted the offer of the third highest bidder, M/S R.U.
Brothers, to match the price and issued the letter of award to the firm on May 30.
The sources said that because of a delay of nine months in sale the price of the scrap offered at Rs92 million was estimated to have quadrupled.
Even after the issuance of the letter, the R.U. Brothers felt that its request was not being considered and the PSM was employing delaying tactics in receiving the remaining amount. The company had moved the Sindh High Court which ordered that the amount of Rs92 million be received from the company.
There were apprehensions in the ministry of production that the PSM management was in league with the R.U. Brothers and had encouraged the company to go to the court to prevent re-tendering. The sources said Production Minister Anwar Ali Cheema had not been taken on board while issuing the letter of award to R.U. Brothers.
The minister wanted to challenge the SHC decision in the Supreme Court, but the PSM management allegedly covertly allowed the R.U. Brothers to lift the scrap.
In a recent letter to the production secretary, a copy of which is available with Dawn, Mr Cheema said that some serious irregularities and financial embezzlement had been brought to his notice. He said the PSM chief executive officer should be directed to submit a point-wise reply to the allegations.
The minister also sought a personal hearing of the PSM CEO in his office and ordered the formation of a committee headed by the production secretary and comprising additional and joint secretaries to investigate the matter.
In another letter, Mr Cheema said that many issues had not been attended properly at appropriate time, causing losses of millions of rupees.
In the most recent letter to the secretary on Tuesday, the minister said: “It is highly regrettable that no action has been taken on my previous instructions on the issue of sale of scrap.”
He said it had come to his knowledge that the scrap has been shifted from the premises in violation of his orders.
“I had also ordered constitution of a high-level departmental committee, besides filing an appeal in the Supreme Court against the SHC decision.
But unfortunately all of my orders are yet to be implemented. I reiterate that a prompt action be taken and an immediate report be submitted to me”.
The minister also sought a report about contracts awarded to different companies by the PSM over the past one year.
Mr Cheema called for audit reports for 2010-11 of all departments, organisations, autonomous bodies, corporations, companies and projects working under his ministry.
