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KARACHI (September 09 2009): An mount of approximately Rs 1 billion may be recovered from the contractors of the Shershah bridge for defaulting in taking out 'Contractor All Risk' (CAR) insurance policies.

Transparency International Pakistan (TIP) Chairman Syed Adil Gilani has written a letter to the Auditor General of Pakistan suggesting to conduct a thorough audit of all the past and current contracts of National Highway Authority (NHA) for CAR policies on Northern Bypass and Coastal Road and recovery from contractors the cost of CAR policies if they were not taken out on contracts.

And, in case of any damage, caused to the projects due to accidents/rains/flood, etc, all expenditure on reconstruction, such cost shall also be paid by the contractors or deducted from their bills. This will give a recovery of approximately Rs one billion.

TIP had been requesting NHA to be transparent in the Shershah bridge disaster, and confirm that the cost of reconstruction and third-party claims (reported to be approximately over Rs 240 million) have been claimed and paid by the insurance company and not by government exchequer.

The same issue was also brought to the knowledge of the Chairman of Public Accounts Committee (PAC) to ensure that no loss is incurred to the government of Pakistan (GoP) due to failure of the contractor or the client. TIP Chairman has written in his letter on August 27 informing the Auditor General that no positive response had been received from NHA even after the passage of three months.

According to the Standard Contract Agreement (SCA) on all contracts in Pakistan, a provision of all cost for the loss to project are to be paid under CAR insurance policy. This insurance policy covers cost of all damages due to any cause, and incidental to the reconstruction of the damaged works, including professional fees and the cost of demolishing and removing any part of the works.

Under Public Procurement Regulatory Authority (PPRA) regulations, procuring agencies, when engaged in procurement of works, NHA and all procuring agencies shall use the standard form of bidding documents prescribed by the Pakistan Engineering Council, constituted under the Pakistan Engineering Council Act, which includes responsibility of the contractor to take out CAR policy.

According to Adil's letter on this contract of Northern Bypass, National Logistic Cell (NLC) is reported to have defaulted to take out the CAR insurance policy, and NHA also did not comply with the contract provisions, which require that in case of contractor's failure to take out CAR policy, or even pay the annual premium of the CAR policy, NHA should have taken out CAR insurance policy itself, and deducted the cost of premium from contractor's bill.

TIP also has information that NHA did not seek CAR policy from Frontier Works Organisation (FWO) on coastal highway contract. The result is that all the cost of reconstruction, two times, over Rs 430 million was made by GoP, due to the failure of the contractors and wilful default of NHA.


Shershah bridge collapse: inquiry report was tampered with: TIP
Business Recorder May 7, 2009

ISLAMABAD (May 07 2009): Prime Minister's Secretariat has been informed that the in 'Shershah bridge collapse', apparently prepared by a six-member panel, was tampered with to save the skin of some 'heavyweight culprits'. "The inquiry report, prepared by the six-member inquiry committee and announced to public in February 2009, 17 months after the accident and 12 months after it was submitted to you, is under criticism.

Allegations of tampering with the actual contents of the report have been levied by one member of the inquiry team," said Transparency International Pakistan (TIP), in a letter to the Chairman of Prime Minister Inspection Commission (PMIC) inquiry committee, Lieutenant General Farooq Ahmad Khan (retired), a copy of which has also been sent to Minister of Communication, Chairman, Public Accounts Committee, Chairman, NHA and DG, NLC.

On September 1, 2007, a major part of the Shershah Bridge collapsed, killing 10 people. On September 23, 2007, the (then) Federal Minister for Communication, Shamim Siddiqui, issued a statement that the inquiry of the incident was complete and would be shown to the media before Eid. This deadline was not met.

In the letter, clarifications have been sought from PMIC Chairman as to why only three members of the inquiry team had signed the report. Out of the remaining three, one member has expired, but the signatures of two other members are also missing from the report.

One of the three members of the committee who had signed the report, Advocate Nasir J R Shaikh, reportedly stated that the report has been tampered with, and the word "criminal" was omitted on page 51, in the third paragraph of the "findings and fixing responsibilities" section. This para was actually "criminal neglect on part of NHA in media".

Page 3 of the inquiry report contains the names of the other members of the inquiry team which is missing from the investigation report posted on the website. TIP has also cited a report according to which PMIC inquiry committee comprised of Dr Sahibzada Farooq Ahmed Raffiqui, Farooq A Chaudhry, Zafar Razzak (late), Dr Sarosh Hashmat Lodhi, Farrukh Hassan Pasha, Munir Ahmed Rana, and a lawyer whose name was not disclosed. These six members, mentioned on page 1 of the inquiry team report, do not include Farooq A Chaudhry, who was the only design engineer in the committee with practical experience as a bridge designer and supervision consultant.

The reinforced cement concrete (RCC) core test results, reported in section 7.2.2 on page 47, state that "for concrete strength, however, split results are reported, where strength from core are much lower than the desired strength. In spite of the deficiency found by inquiry team, the report has not blamed contractor, M/s NLC.

Instead, the report in section 7.2.3 has tried to exonerate contractors' deficiency by stating 'as is evident from the report that diameters of cores were smaller than specified in ASTM C-42 and that the core drilling machine was producing vibrations during drilling, both these factors contributed towards the low strength indicated by core tests'."

These remarks cast doubts on the technical abilities of the inquiry team members on the core testing procedures, as the tests were performed under supervision of the inquiry team members, and in the NED University lab. Why and under whose orders correct size of core samples were not obtained by the committee? Though the TOR for inquiry team was also to make recommendations for avoiding such tragedies in future, the report does not contain fruitful and concrete recommendations for avoiding such accidents in future.

According to the TIP, in fact the committee members seem to be ignorant of the Tendering Rules, Public Procurement Rules 2004. The statement on page 57 confirms lack of knowledge of the committee members on the procurement laws in Pakistan.

BIDDING PROCESS: Process of biding should be reviewed in the light of best value procurement system, instead of the existing system and no hiring of contractors or consultants should be allowed without competitive bidding". The Procurement Rules under the Statuary requirements under SRO 432(I)/ 2004. - 9 June, 2004, in all federal government departments are:

20. PRINCIPAL METHOD OF PROCUREMENT: Save as otherwise provided hereinafter, the procuring agencies shall use open competitive bidding as the principal method of procurement for the procurement of goods, services and works.