Irregularities found in Karachi-Lahore motorway project

ISLAMABAD: After alleged misappropriation worth Rs.166 billion in Karachi-Multan-Lahore Motorway PC-I project, another misappropriation of Rs 148.6 billion has been found in the Karachi-Lahore Motorway (KLM) project. According to an audit report, irregularities and misappropriations worth Rs 148.6 billion were found in the KLM project. The Auditor General of Pakistan (AGP) revealed that the project relating to the Engineering, Procurement and Construction (EPC) of Karachi-Lahore Motorway (KLM), Section-III: Lahore-Abdul Hakeem (230 kms), was awarded to a Chinese firm M/s CR20G-ZKB-KLM-JV for Rs 148.654 billion. Audit observed that the whole project was put to tender in one package, violating PEC standard procedure for pre-qualification of contractors, wherein it was preferable to divide the packages of project in such a way so as to allow medium sized construction firms to bid with preference to provide benefit to local construction industry in Pakistan. “Due to single package, very strict conditions of experience for pre-qualification (at least one EPC/turnkey highway contract within the last seven years for a value of Rs 910,00 million) reduced the quantum of response,” the report said. “This viewpoint is strengthened by the fact that no Pakistani firm even holding PEC Licence with ‘no limit’ was able to provide such experience. Had the project divided into multi package, it would have resulted in more healthy competition. There is no justification/approval on record for tendering of the Project in one package,” the report said. It further stated that Engineering member approved criteria for pre-qualification of the contractors despite the fact that powers to award project of such pre-qualification of contractors rest with Executive Board NHA/Committee as per NHA Code 2005. “The finalisation of pre-qualification criteria at member (E) level is unauthorized/ irregular,” the report stated. During pre-qualification process, China Railway 20 Bureau Corporation produced experience of construction of 359 KM West Single Part East West Expressway in Algeria. On this basis the said company was pre-qualified by National Highway Authority (NHA). “The said project (of Algeria) was completed by CITIC-CRCC Group (Mother Company of CR20G). Pre-qualification of the firm on the basis of experience certificate of a joint venture and of mother company instead of its own was irregular,” the report observed. “At the time of bidding the lowest bidder, CR20-ZKB KLM (JV), did not provide bid security of Rs 500 million in the name of JV as required. According to rules, each bidder shall furnish a bid security of an amount not less than Rs 500 million and in case of joint venture, bid security shall be submitted with name of proposed JV accordingly,” the report said. “The bid was to be declared non-responsive which was not done. Negotiations/bid clarification meetings were held with the lowest bidder. Negotiations were made in violation of PPRA Rules and only with one bidder. The other bidders were not aware of such negotiations,” the audit report further said. The report stated that the work was awarded irregularly, adding that the issues had also been highlighted by the Transparency International Pakistan (TIP) through different communications available on TIP website. “The work/project was put to tenders in one package instead of two or more packages. “Had the work been retendered, and in packages, it would have been awarded on much lesser rates,” the audit observed. The NHA contended that in order to avoid interfacing, coordination and quality and design consistency issues, the 6-Lane Motorway Project was put to tender as a single package with EPC/turnkey form of contract. It added that the finished product (ie 230 km, access controlled, ITS enabled motorway facility) was also required to be of international standards for which a suitable seasoned contractor having experience of executing mega motorway projects was essential. Published in Daily Times, November 6th 2017.