Minister for Water and Power Raja Pervez Ashraf, who is already under severe criticism over the unending load-shedding and expensive rental power projects, has ordered an immediate inquiry into the awarding of the contract.

ISLAMABAD: The government has ordered an inquiry into a Rs4 billion contract for supply and commissioning of Rahimyar Khan 500-KV substation project, following allegations levelled by foreign lenders and the lowest bidder from China about unfair bid evaluation process.

Documents available with our correspondent suggest that the Chinese joint venture TBEA-NEIE was the lowest bidder for the design, supply, installation, testing and commissioning of plant and equipment for the 500/220/132KV substation at the time of bid opening in November 2009 with a bid price of Rs3.56 billion, almost Rs114 million less than the second lowest bid of Rs3.675 billion submitted by another Chinese company, CNEEC-FNEPCC.

In its complaint to Minister for Water and Power Raja Pervez Ashraf the lowest bidder alleged that “due to unfair loadings on different accounts by the evaluator, the lowest technically responsive bid was pushed to second position from the first place, causing a colossal loss of more than Rs100 million” to the national exchequer. The minister, who is already under severe criticism over the unending load-shedding and expensive rental power projects, has ordered an immediate inquiry.

The matter had also been taken up with the prime minister.

Informed sources said a six-member committee led by water and power secretary Shahid Rafi and comprising two senior officials of National Transmission and Dispatch Company (NTDC) and Pakistan Electric Power Company (Pepco), two leading teachers of the Engineering University Lahore and Lahore University of Management Sciences and a private chartered accountant would examine the issue in detail in the light of observations made by the Japan International Cooperation Agency and Pepco’s consultants in a couple of days to submit a report on the project.

The sources said that the major cause for pushing the second lowest bidder to the place of lowest bidder was the support the company enjoyed from a ‘celebrity’ and a former senior officer of the water and power ministry but this has put the relevant authorities in an awkward position.

The complainant said the unfair loading of the first lowest bid and pushing it to second place “was also rejected by the donor agency – Japan International Cooperation Agency – saying the loading on account of late completion to TBEA-NEIE bid is not appropriate and is unjustified”. The complainant also told the minister that the second lowest bidder, now being considered for the award of the contract, had no office in Pakistan, was largely a trading company and had never built a 500 KV substation while its joint venture partner had no experience of EPC contracts. The JICA which is providing $48 million loan to the National Transmission and Dispatch Company for the project said the lowest bidder had confirmed in the covering letter of their bid, bid form and project completion schedule that it would complete the project within the specified period. It asked the NTDC to revise the evaluation report and resubmit it.

Documents suggest that Pepco and NTDC’s consultant office did not agree to price loading and concluded that the TBEA-NEIE was the lowest evaluated responsive bidder. Another three-member committee of the NTDC also rejected the engineers’ report and said ‘the bidders offering the lowest price were not considered for award”.

The three-member committee held that the engineers’ evaluation was based on “an irrelevant schedule of construction methodology” and the re-ranking of the lowest bidder to the second place was “unfair and unjustified” from almost all bidding parameters. The committee concluded that the “bid of M/s TBEA-NEIE stands to be the lowest evaluated responsible bid for the package, so they need to be considered for award of contract”.

In a written response, a Pepco spokesman confirmed that M/s TBEA-NEIE of China had submitted competitive bidding documents for the transmission line project while another Chinese company M/s CNEC-FNETCC was also part of the bidding process. It said the Nespak was one of the consultants engaged for pre- and post-bidding technical and financial evaluation process of the said project. Nespak has highlighted some missing links in the TBEA proposal which “have not reached finality”.

The spokesman said the NTDC/Pepco were interacting with Nespak before the professional evaluation procedures were finalised while Wapda’s central contract cell was also considering Nespak and NTDC evaluations on technical grounds as an external evaluator and claimed the JICA, having its own evaluation mechanism, was yet to firm up its conclusions on the outcome of bidding procedures. It said the NTDC board of directors was yet to be updated on the pros and cons of the project for final approval of the competent forum and asked media “not to rely on premature disclosures”.