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Anomalies found in Rs4.6bn power project

May 17, 2012


Wapda allegedly tried to convince the Kuwait Fund to approve their preferred company despite the price and qualification differential, forcing the National Assembly, Transparency International and the Ministry of Water and Power to go into action. - File photo


LAHORE: A two-member inquiry committee of the Ministry of Water and Power has found “numerous discrepancies and procedural anomalies” in the award of contract by Wapda for Rs4.6 billion Golen Gol Hydropower project.

In its “confidential report” (No1(6)DS(a)/2012), the fact-finding inquiry committee has maintained that the “bid evaluation was not according to relevant clauses of instructions provided in the tender document”.

The project is being financed by the Kuwait Fund, which makes the anomalies a sensitive matter vis-à-vis trustworthiness of the state. Also, the alleged illegalities in the tendering process may lead to cancellation of the contract, costing the country Rs5.5 billion a year.

Due to the sensitivities of the matter, the Ministry of Water and Power, a standing committee of the National Assembly and the Transparency International are also looking into the matter, accusing Wapda of violating the rules. The Wapda, however, denies any wrongdoing.

The report states: “After careful scrutiny of evidence and material on record, it is proven that the bid was postponed several times (as per the critics, for accommodating some unqualified but a favourite few). The delay in the opening of tender for six months is neither understandable, nor justified.”

The consultant had evaluated M/s Andriz Hydro as the lowest bidder, but Wapda unilaterally overloaded its price, which is against the spirit of the tender document. Wapda never advertised the project on the web --- a pre-requisite under the PPRA rules, the report said.

“The process later adopted by Wapda for prequalification of bidders was not approved prior to the bidding process --- which is a glaring anomaly and against the spirit of the pre-qualification process.”

Wapda had opened tenders for the 106MW Golen Gol Hydropower project, which is located on River Golen Gol --- a major tributary of the River Mastuj in Chitral district of Khyber Pakhtunkhwa --- on June 30 last year. M/s Andriz became the lowest bidder with a price of $48 million, against more than $58 million quoted by M/s Rainpower, a joint venture of four companies.

The Rainpower JV, despite missing two major qualifications --- a turnover of $25 million for the last five years and experience of similar projects for 10 years --- was pre-qualified by Wapda. Interestingly, the World Bank has recently banned one of the partners of Rainpower Joint Venture on corruption charges.

The international consultant (M/s Fitchner Germany) recommended the lowest bidder (M/s Andriz) as contractor. Wapda, instead of going along with the recommendations of the consultant, initiated a parallel (in-house) process of re-evaluation, unilaterally overloading the price of the lowest bidder through its own valuation and awarded the contract to the bidder of its choice.

It also allegedly tried (through a letter on March 21, 2012) to convince the Kuwait Fund to approve the same company despite the price and qualification differential, forcing the National Assembly, Transparency International and the Ministry of Water and Power to go into action.

A spokesman for Wapda, however, denied the ministerial committee’s charges, insisting that the entire process was “transparent and clean”.

“Since everything is in accordance with rules and regulations, the consultant is fully engaged in the project.”