LAHORE, Jan 28: Wapda's decision to grant the Neelum-Jehlum Hydroelectric Project to a single contractor instead of four, as decided earlier, would cost the country an additional Rs9.6 billion.

According to the lowest financial bid, opened on July 15, 2006 and currently being finalised by the authority, the total cost of the project stood at about Rs90 billion.

According to sources and stakeholders, the first and second lowest bidders had quoted the electrical component of the same manufacturer, Habin of China, but quoted different prices.

The price quoted by the otherwise lowest bidder is higher by $160 million (Rs9.6 billion) than the one quoted by the second lowest bidder.

Since Wapda has decided to grant the contract to a single contractor instead of four different parties, which has been a standard practice in other similar projects, it will pay a higher price for the component, which is otherwise much cheaper.

As per details of the case, the Water and Power Development Authority prepared the tender based on four packages — electrical, mechanical, civil works and hydraulic -- on Jan 1, 2005.

The four-package deal was based on the recommendations of the consultant — the National Engineering Services Pakistan (Nespak). The packages were aimed at facilitating the suppliers to arrange credit for the project.

Nespak later amended the tender from four to one package. Nespak managing director Ch Karamat says that the tender has been amended to facilitate the work and avoid intra-contractors coordination hiccups. "The experience of the Ghazi-Brotha Hydel project was in the mind of Nespak when such problems cost additional money and time."

But the stakeholders claim that tender has been amended on the pressure of the Ministry of Water and Power to benefit a particular contractor. Otherwise, many contracts have been granted on four-package based tenders after the Ghazi-Brotha project. Even smaller projects like Satpara dam have been awarded on package-based contracts.

The package-based tenders, they say, are a routine in Wapda as they attract more contractors, encourage competition and lower the price. "The Neelum-Jehlum project seems to be an odd exception," they insist.

Wapda found it hard to find a contractor on supplier’s credit basis and its tenders were cancelled trice. Ultimately, it floated the same tender on buyer's credit basis and promised to arrange the funds.

The financial bids were opened on July 15, 2006. The lowest bidder turned out to be the joint venture Gezhouba/ CMEC with $1.543 billion, and the CWE became second lowest bidder with a price of $1.806 billion.

When Wapda was requested for its response, it said: "It is only following recommendations of the consultant. It prepared four packages tender, but the consultant amended it and converted it into one package. Hence, it is one-package deal."

Refusing to comment on price difference and possibility of re-tendering, Wapda said that matter was now at the finalisation process and that the re-tendering could delay it by another year.

When the Nespak MD was asked to comment on the price difference, he said it was up to Wapda to take the final decision. "It can see the deference and correct it, if it needs to."

The sources and stakeholders, however, insist that if Wapda has to grant it to a single contractor, it must, at least, negotiate the price with the lowest bidder and try to reduce the price of electrical component. "It has a valid case to take up with the lowest bidder and save precious foreign exchange."