The Transparency International Pakistan (TIP) has objected to the government’s decision of awarding a $350 million consulting contract to M/s VO Tyazhpromexport in violation of the Public Procurement Regulatory Authority (PPRA) Rules 2004.
In his letter to the chairman of the Pakistan Steel Mills (PSM), a copy of which is available with Pakistan Today, TIP Adviser Adil Gilani said the PSM had requested the Economic Coordination Committee (ECC) a waiver from the PPRA rules to award its technical audit contract worth $0.15 million (Rs 135 million) without withholding tax to the Russian state-owned firm VO Tyazhpromexport.
“Tyazhpromexport is the original designer and manufacturer of Pakistan Steel, which expressed interest in the technical audit of the politically controlled and financially undisciplined entity. The matter of expansion of Pakistan Steel’s production capacity came up for discussion during the visit of the Pakistani president to Russia on May 11-13, 2011,” the letter stated.
The TIP informed the PSM chairman that such an effort was also tried in 2010, but the TIP raised an objection in its letter on May 31, 2010, and the PSM managing director in his letter dated June 10, 2010 had clarified that no such agreement was in process with one single party, and that if and when such a scheme was finalised, it would be processed further, the letter added.
The TIP adviser said that during the second meeting of the expansion committee in Islamabad on May 20, 2010, the PSM was directed to work out its comprehensive requirements, including the financing aspect to carry out the expansion plan. “The committee also advised Pakistan Steel to contact renowned steel plant manufacturers. Once approval is accorded by the government to the firmed-up proposal, only then further process will be followed,” Gilani said.
The TIP sought clarification from the PSM chairman on how the Russian company could be awarded a consulting contract for making the estimates for PSM’s expansion, as the steel producer was itself being considered for the award of a US$350 million contract.
“Is it not a conflict of interest, and collusive practice under the Public Procurement Rules 2004, Rule 2(f), which prohibits collusive practices among bidders (prior to or after bid submission) designed to establish bid prices at artificial, non-competitive levels and to deprive the procuring agencies of the benefits of free and open competition,” Gilani argued. Who has given the PSM the authority to request an exemption from PPRA Rules 2004 in the presence of the PPRA Ordinance 2002, he asked.
