KPT in hot water for making 90pc payment for partial work

The Senate’s Standing Committee on Ports and Shipping has asked the Karachi Port Trust (KPT) for the financial details of still-controversial Pakistan Deep Water Container Port (PDWCP), the first phase of which is near completion at Keamari Groyne at a mammoth cost of Rs 60 billion.
Senator Fateh Muhammad Hassani, chairman of the committee, in the body’s last meeting here at KPT on October 10, hinted at holding an “in-camera” session in Islamabad after “a huge discrepancy” surfaced in the financial affairs of the mega project. The senator from Balochistan took a strong exception to the apparent irregularities in the development of PDWCP during a presentation on the deeper-draught seaport given to the senate body by Shaib Mir, acting KPT chairman and director general ports and shipping.
The 13-member committee raised eyebrows when Mir told the senators that the previous KPT management had made 90 percent payment to a Chinese contractor for undertaking only 55 percent work at one of PDWCP’s projects.
M/s China Harbour Engineering Company (CHEC) is the beneficiary contractor of Construction of Quay Wall project having received, up to Sept 30, 2013, over Rs 17.546 billion, the body was informed. The work progress on the Rs 18.28 billion project is 55 percent, however. While the contractor has been paid almost in full the project is far from completion. Commenced in Oct 2010 the building of quay walls for four berths is expected to complete not before next year in December. “Financial progress is much more than physical progress. We have to look into it in detail,” the newly-appointed acting KPT chief, Mir, was visibly concerned.
The committee members agreed when Mir said the volume of payment made and physical progress in the project was incompatible. “90 percent payment for 55 percent progress!” the KPT chairman wondered. Chairman senate body Fateh also termed the issue as a “big question” mark for the Trust’s financial affairs. “Why this happened? It is a big question,” he said.
Senator Shahi Syed said for undertaking 55 percent work the KPT at maximum should have paid Rs9 to Rs 10 billion to the contractor. “The contractor’s leverage now is 100 percent. He would give it a damn even if you stop work at the project,” said the ANP senator.
KPT officials, including ex-GM Planning and Development Brig (Retd) Jamshed Zaidi, Hanif Abdullah of P&D, consultant Farooq Chawdhry and others, were speechless on the issue raised.
Dubbing the development a “huge discrepancy”, KPT chairman Mir viewed that as a standard practice 25 percent payment is made for 50 percent work progress. Senator Fateh, chairman of the Senate Standing Committee, asked the KPT management for complete documentary details of the project. “We would take up the matter with the project consultants (M/s Royal Haskoning & M/s Indus Consult, Pakistan) in the next meeting,” he said. The chairman said if the consultants, specially the foreigners, failed to attend the next meeting the committee would hold an in-camera session to take “its own decision” on the irregularity. As reports of corruption and politically-motivated inductions, specially in KPT and Port Qasim Authority, remained rampant during the last five-year reign of PPP-led coalition government, the Senate body, backed by PML-N’s ports and shipping minister Kamran Michael, appears to be more suspicious of the financial matters in the KPT projects. According to the Senate Secretariat agenda for Oct 10th meeting, the committee sought from KPT a detailed briefing on PDWCP: the process adopted for awarding contracts, feasibility reports, agreement with the concerned companies, total cost of the project along with details of expenditures so far incurred.
As the agenda reads, the senate body even sought from the KPT “copies of the cheques paid to the… contractors.” Also, despite the elapse of over a decade and having incurred a mammoth expenditure of Rs 45 billion, the PDWCP stands controversial with different Senate bodies time to time having been questioning legitimacy and necessity of the deep water container port in the presence of deep-draft port of Gwadar.