Sources say corruption case based on why contract awarded without approval of engineering cost estimates
ISLAMABAD: The National Accountability Bureau (NAB) has decided to challenge the Lahore High Court (LHC) order pertaining to the bail of all the directors of Punjab Saaf Pani Company (PSPC), including Pakistan Muslim League-Nawaz (PML-N) candidate in 2018 general election Raja Qamarul Islam, in Supreme Court.
On January 30, a two-judge bench, comprising Justice Malik Shahzad Ahmad Khan and Justice Mirza Viqas Rauf, granted bail to all accused arrested by the NAB in the PSPC corruption case.
Sources told Pakistan Today that NAB will challenge the LHC decision in SC during the coming week.
The LHC in its verdict said that the NAB authorities have mala fidely proceeded against two directors of the company, Qamarul Islam and Waseem Ajmal.
Sources told that Qamarul Islam was not made accused as being member of the Board of Directors (BoD) rather he was made accused in the case as procurement committee convener because he approved the award of contract to KSB Pumps at an exorbitant price of Rs 989 million. Moreover, Waseem Ajmal was made accused because he, as PSPCS CEO, changed the scope of the project in violation of the PPRA Rules of 2014 and caused loss to the state exchequer by approving an application of weather shield at water filtration plants at exorbitantly higher rates. Furthermore, the BoD was misled by the company regarding the change in scope of the project.
The LHC in its judgement stated that there is no allegation against the petitioners that they received any commission, kickbacks, and illegal gratification while awarding the contract in quest
Moreover, it has also been contended in the judgement that there is nothing on the record that a single penny was paid to petitioners or transferred in their accounts or in the accounts of their relatives or friends.
Sources told that, on the contrary, the instant case is based on the fact that bidding process was conducted and subsequently contract was awarded to KSB Pumps without approval of engineering cost estimates. The non-approval of engineering cost estimates from any forum has rendered the whole process from bidding till the execution of contract illegal.
Moreover, the case is regarding the award of contract to KSB Pumps for installation of water filtration plants in Bahawalpur Region at exorbitant rates. Sources further told that KSB Pumps installed Reverse Osmosis plants having a capacity of 1,000 litres per hour at an excessive price of Rs3.325 million for PSPC in Bahawalpur during 2015 -16.
On the contrary, the reverse osmosis plants with the capacity of 1000l/h having same specifications and same membrane catering for total dissolved salts of 5,000 parts per million were installed by KSB Pumps for Public Health and Engineering Department in Lahore at a price of Rs 1.884 million till June 2016.
Similarly, the reverse osmosis plants having a capacity of 2,000l/h, ultra-filtration plants having capacities of 1,000 l/h and 2,000l/h were installed by KSB Pumps in Bahawalpur for PSPC at exorbitant rates. In addition to this, the operation and maintenance of te water filtration plants in Bahawalpur have also been charged by KSB Pumps at an overpriced rate as compared to the same charged by KSB Pumps for water filtration plants installed in Lahore.
Sources told that as per the technical expert, loss amounting to Rs130.604 million was inflicted to the state exchequer as a result of the installation of water filtration plants including O&M at exorbitant rates by KSB Pumps.
Similarly, as per the civil works experts, loss amounting to Rs 133.28 million has been inflicted on account of defective civil works and execution of civil works at exorbitant rates.
In addition to this, according to the solar experts, loss amounting to Rs 81.944 million was inflicted to the State Exchequer as a result of execution of solar works at exorbitant rates. All in all, the total accumulated loss of Rs 345.828 million has been inflicted as a result of the installation of water filtration plants and execution of civil and solar works in Bahawalpur at exorbitant rates.
The LHC in its verdict further said that under relevant rules, the petitioners/BoD of PSPC were authorised to award contracts at 4.5 per cent higher amount than the amount mentioned in engineering cost estimate.
Sources told that, on the contrary, no rules and regulations exist which suggest that the contractor selection committee, procurement committee and BoG are authorised to award contract at 4.5 per cent higher amount than the amount mentioned in engineering cost estimates.
Moreover, as per Punjab Delegation of Financial Rules, the rates quoted and amount tendered are such that the total cost of the project will not exceed the amount for which technical sanction has been accorded by more than 4.5 per cent. In the instant case, the bid of KSB Pumps amounting Rs 1.14 Billion exceeded unapproved cost estimates of Rs 995 million (14% higher). Re-bidding should have been initiated. Instead, KSB Pumps illegally negotiated with PSPC in violation of clause 57(1) of PPRA Rules, 2014 and reduced the bid price to RS 989 million, which is exorbitantly high too. Due to aforesaid negotiations, level playing field was not given to the second bidder namely Amin Brothers, sources added.
In the judgement of LHC that under Rule 57 (2) and (3) of the Punjab Procurement Rules, 2014, it has been provided that in case of goods of highly technical nature (machinery, it’s parts, industrial equipment’s, plants) a bid can be negotiated immediately after the opening of bids. The judgment quoted clauses 57(1), 57(2) and 57(3) of PPRA 2014 and stated that the petitioners did not commit any illegality in negotiating the price of bid with KSB Pumps and reduction of same immediately after the opening of bids.
Sources told that the clauses 57 (2) and 57 (3) of the PPRA Rules are not applicable on the instant case as bidding process followed in
PSPC was of single stage two envelope, where in no negotiations what so ever are allowed. In Rule 57(3) of PPRA Rules 2014, it has been clarified that the expression of goods of highly technical nature means all goods including machinery, it’s parts and micro-components, industrial, scientific or electronic equipment, plants and tools which are sophisticated in nature costing more than Rs 50mn and procured by adopting two stage two envelope procurement procedures.
Source further told this scribe that water filtration plants procured by Saaf Pani Co were not in the category of goods of technical nature. The plants procured in Saaf pani case along with civil works at max cost Rs13 million each while two stage two envelope process of bidding was never adopted by the PSPC, they added.