The Inaction of Government of Pakistan and ADB Will Result in a Loss of RsTwo Billion

The inaction of Government of Pakistan and Asian Development Bank (ADB) in rectifying discriminatory specifications in tender documents for the procurement of energy saver lamps will result in a loss of Rs two billion to the national exchequer. There have been widespread allegations on procurements of these lamps at 100 percent higher rates than the prevailing market rates. Adviser, Transparency International Pakistan, Syed Adil Gilani said that the Government of Pakistan and Asian Development Bank process of procuring 30 million lamps under National Compact Fluorescent Lamp (CFL) Project would result in costing national exchequer an additional Rs 2.0 billion In a letter sent to Finance Minister Abdul Hafeez Shaikh and Country Director, Asian Development Bank, Rune Stroem on November 10, he said: "it is unfortunate that Government of Pakistan and Asian Development Bank have failed to address the issue." Transparency International Pakistan since December 3, 2009 had been informing managing director, Pepco, Prime Minister's secretariat, President's secretariat, Chairman, Public Accounts Committee, Auditor General Pakistan, Planning Commission and country head of ADB that cost of each bulb is estimated by Pepco/ADB at $1.37, whereas for Bangladesh similar project funded by World Bank at the same CLF cost was $0.80. This act of incorporating discriminatory specification of CFL Pepco/ADB, in the 30 million CFL project will now result in costing Pakistan exchequer an additional cost of Rs 2.00 billion ($1.60 - $0.84= $0.76). On November 4 Pepco opened the tender and declared that under Asian Development Bank financed Pakistani project the lowest tendered price is $1.6/CFL. In Bangladesh under World Bank financed project, under international bidding process, two companies will supply 8.15 million CFLs at a cost of Tk 525.4 million, ie $0,84/CFL. Adil Gilani said it is known to all that the average cost of one CFL lamp in Pakistani shops is between Rs 120 to Rs 150. This includes almost hundred percent addition over the import cost, due to port clearance expenses, custom, GST, withholding tax, transport from port to importer, and importers profit. Further in the cost is added charges for transport from importer storage to whole sellers' godowns, whole sellers profit, transport from whole seller to shopkeepers' place and shop keepers profit. And when an import is made in bulk, like 1 caror in this case, the manufacturer of CFL discount is normally over 25-35 percent. Asian Development Bank is financing 50 percent of the project, and the cost of import due to ADB insistence on the biased and discriminatory specifications has increased by almost hundred percent. Transparency International Pakistan requested the Minister of Finance that at this time of acute financial crunch, Pakistan needs to stop this loss of Rs 2 billion to the exchequer. It has suggested following options which could be examined. Discharge the tenders, ADB may be disassociated with this particular procurement, and its financing for this procurement may be withdrawn, amend the specifications in the new tender which have been used by the World Bank in Bangladesh Project, and invite tenders under ICB Bidding procedure of Public Procurement Rules 2004. Government of Pakistan may save the cost of ADB financing on this procurement, as by substituting ADB's requirement of specifications with the specifications of the World Bank financed Bangladesh project will result in procuring the CFL at half the current quoted cost. Adil Gilani assured that Transparency International Pakistan is striving for across the board application of Rule of Law in Pakistan. Source: www.brecorder.com