ISLAMABAD: The purchase by Pakistan International Airlines of an aircraft engine at a cost of $2.8 million has set off whispers about financial impropriety, Dawn learnt on Wednesday.
Sources in the PIA said rules and regulations laid down by the Pakistan Procurement Regulatory Authority (PPRA) were not being met in the purchase of overhauled engine of Airbus-310. The purchase order No-S98F20003 of the PIA, obtained by Dawn, said the engine (no-PW4158-3A) was required on an urgent basis.
The sources said purchase order of the engine was being given to a blue-eyed contractor even though another agreement inked last year between the national flag carrier and a Dubai-based US firm, Transworld, under which PIA was bound to purchase all parts of its planes, and even engines, from the US firm.
It has been learnt that PIA had violated PPRA rules by not inviting tenders through newspaper advertisements for purchase of the Airbus engine.
“The amount the PIA is paying for the purchase of an overhauled engine is enough to get three engines repaired,” an official of the airline said.
However, PIA spokesman Sultan Ahmed brushed aside talk of irregularity in the engine purchase and awarding a contact in this regard. “It is very difficult for public sector organisations like PIA to violate PPRA and other rules,” he argued.
But at the same time, the spokesman said he was not aware of the nitty-gritty of the issue and would be able to come up with satisfactory replies only after seeking information from the departments concerned.
In reply to a question about PIA-Transworld contract, the spokesman said that under the agreement, the firm had already been informed Pakistan International Airlines would also purchase parts from other vendors if it (Transworld) failed to meet the orders. “But even in that case the firm will have to provide three months credit facility to Pakistan International Airlines for the purchase of material,” he said.
In September the PIA awarded a multi-billion dollars controversial contract to Transworld for purchase of spare parts, consumable material, chemicals and other items for its planes. Under the agreement, the firm has to provide $700 million credit facility to the airline for 90 days.
A letter issued and signed by Khalid Iftikhar, Director of Procurement and Logistics (PIA) at to Chairman, Transworld Aviation, Abdullah Khamas Al-Sulaimany, on Sept 24 said: “This is to acknowledge and confirm that Pakistan International Airlines Corporation have appointed Transworld Aviation exclusively with first right of refusal for a period of five years for all services pertaining to normal supply of aviation spares and repair/overhaul management of rotables, consumer material, chemicals and life limited parts with aggregated value of not less than $40 million annually.
Transworld Aviation has provided a credit facility of up to $700 million if required to support PIA’s operations.”
The national carrier purchases spare parts worth billions of rupees every year. The bill for June 2010-June 2011 period was a staggering Rs500 million.