LAHORE, July 6: Wapda’s failure to construct the Muzaffargarh-Gatti transmission line during the last four years has caused a loss of Rs30 billion.
A need for 500kv transmission line between Muzaffargarh and Gatti (near Faisalabad) was felt after the commissioning of independent power producers in the south of the country. Hydel projects in the country are situated in up north. This situation, in electricity transmission terms, means that in summer over 5,000mw travels from north to south, and in winter vice versa.
At present, this transmission is being carried out through other 220kv and 500kv lines resulting is overloading of these lines. As per the PC-1 of the transmission line, this overloading is causing a loss of over 300mw, which, at sale price of mid-nineties when it was written, amounted to Rs9 billion a year. The PC-1 recommended construction of 265km Muzaffargarh-Gatti line by 1996-97.
It also called for an additional line to save the system from single contingency risks. But, both these lines seem to have become victim of Wapda’s red-tapism and possible corruption.
A reading into repeated grant and withdrawal of contracts for these lines make it a sorry scenario. Wapda invited bids for the construction of Muzaffargarh-Gatti transmission line at a cost of $54.63 million in 1997. The authority granted the contract to a Chinese consortium M/s CCC-CCPG on 16-10-98. The consortium sent an acceptance letter on 02-11-98. But, in the meantime, the Army management took over Wapda. The new management asked the CCC-CCPG to furnish a performance guarantee. The Chinese consortium furnished the same from a Chinese bank. But it did not satisfy the new management. The consortium was told to arrange a guarantee from any “reputed Pakistani bank.” The Chinese agreed, but asked for a repayment guarantee before furnishing performance guarantee. Wapda could not do the same, but it withdrew the contract. Few questions were left unanswered; if repayment guarantee was part of the contract, why Wapda did not arrange it. If not, why it did not blacklist the Chinese consortium.
When asked to comment on this apparent anomaly, the Wapda spokesman preferred to keep quiet. Without calling new tenders that authority must according to its own rules, one of the original biders M/s Hyundai was called in to fill the CCC-CCPG gap. It submitted three proposals vide a letter dated 22-11-99. But a year was lost in the process. The chairman “approved” these conditions on 13-12-99; once again, rules were clearly violated.
According to Wapda’s book of financial powers, any tender above Rs80 million has to go to authority and no single individual can decide the matter. When asked to comment on the issue, the Wapda spokesman agreed that the chairman accorded approval. Things did not stop there. Once again, something went wrong between Wapda and M/s Hyundai and the contract was withdrawn.
According to Wapda spokesman explanation “Hyundai’s conditions were specific to buyer’s credit which were not accepted to Wapda and resulted in withdrawal of contract.” Once again, no action was taken against M/s Hyundai, if it was at fault. Wapda spokesman said that since Hyundai did not accept notice of award fully, no action was required. But during this wrangling, another tow years were lost.
Ultimately, the authority took up the matter on 02-10-01. Noting the urgency of matter it decided to go for a “gallop tender” on bidders financing basis giving six-week time for international competitive bidding. But interestingly, this decision was not notified till 22-10-01; three weeks were lost in the notification out of total six given for international bidding.
Once again, in clear violation of its own decision, the authority suddenly decided on 26-11-01 to award the contract to CCC-CCPG — a consortium that should have been blacklisted in the first place in 1999 — at the same financial and procedural condition. A formal notification of contract award was issued on 21-12-01. But, once again, the contract has hit the snags as Wapda has not been able to arrange a repayment guarantee from any Pakistani bank. It may soon be approaching the government to furnish the same.
The Wapda spokesman, while conceding award of contract, said that new bidder’s price was expected to be high so the award was given to the CCC-CCPG at old price on its own request. But he failed to explain that the price had already shot up by over Rs850 million because of dollar price escalation — in 1998, dollar used to cost Rs44.
About system losses, spokesman said load demand on system had not increased as anticipated earlier by the Wapda’s planning department. As such, the requirement of the 500kv Muzaffargarh-Gatti transmission line was “not so urgent” rather it was a project for the future. Hence no loss to the system or any financial impact was experienced due to the delay in implementation of the project.
But this assertion of Wapda clashes with the importance attached to the project by the PC-1, prepared way back in the mid-nineties and the authority’s decision of going for “gallop tender.” Meanwhile, according to Wapda’s statistics, system load growth is ranging around 10 per cent during the last three years.
