Shahbaz pampers NLC with monopoly, jacked up rates

[Salman]

Shahbaz pampers NLC with monopoly, jacked up rates

LAHORE - Punjab Chief Minister Shahbaz Sharif’s penchant for all things military – in this particular instance National Logistics Cell, for short NLC – is bleeding the province’s exchequer. But the CM’s instructions sustain: NLC has to have a monopoly on all big-ticket, high-value infrastructure work in the province, never mind even if it costs an arm and a leg more than the civilian contractors – who actually end up executing it.
Since everything military costs more – not unlike most countries all over the world – the NLC’s price tag is predictably higher – by a considerable margin. The CM knows it well, but he still has to have his way. And that translates into, Pakistan Today has learnt on good authority, the NLC rates jacked up by 15 per cent. And what does the NLC do afterwards? It sublets almost all its work to private contractors! Only if the Punjab government invited bids and created a level playing field instead of handing hegemony to NLC, it would save it billions of rupees which could be used for what these were intended: the public benefit.
Explaining how the market price is set, a senior officer on condition of anonymity said that estimates are collected from the Public Works Department executive engineers and sub-divisional officers (these rates are already inflated in any case since kickbacks have to be factored in) and are passed on to the finance department, which counter checks and approves.
“The finance department rate is the benchmark and a contractor can bid higher but up to 4.5 percent and as low as it deems fit. But in case the bid is lower, the government locks the contractor through surety bonds to make sure it doesn’t renege later,” the official added. But here the CM has used his discretion, and not just offered all major contracts to the NLC on a platter but at rates 15 per cent above the approved benchmark – for no obvious benefit. It just doesn’t stop here: other ‘relaxations available exclusively to the NLC’ are indeed fabulous too. One, the mandatory 6.5 per cent at source income tax is not deducted. Two, in case equipment not displayed on the finance department website is employed, an additional 4.25 per cent is dished out. Three, unlike civilian contractors, the NLC does not have to deposit 10 per cent security.
The major projects given to the NLC recently include: the widening of the canal bank road costing around Rs1.6 billion, the Kalma Chowk Flyover at Rs2.7 billion, the Muslim Town flyover at Rs3.7 billion, Chandni Chowk, Rawalpindi at Rs4 billion. Even the Lahore Ring Road which was initially given to private contractors through the highways department was later handed over to the NLC. Interestingly, the NLC sublet all the aforementioned projects to private contractors – who have all previously worked directly with the Punjab government on several projects. It might just be a coincidence but there is a monopoly within the monopoly. The NLC sublet all its aforementioned projects (together worth Rs12 billion, excluding the Lahore Ring Road) to one contractor – Habib Constructions. The latter, along with two others, built the Kasur-bound Ferozepur Road after Hussnain Cotex and Ecowest were blacklisted over delays.
The Superintending Engineer Highways, Lahore Circle, Sabir Khan Sadozai says, “The NLC is preferred over civilian contractors owing to its reliability. We want to avoid the Ferozepur Road-like situations where a contractor flees, leaving us in the lurch. The NLC is huge and responsible – and can make up for a delay or a mishap.” The critics of the policy maintain that the SE’s justification implies that the NLC has grown bigger than the Punjab government itself.
“If the NLC can keep its sublet contractors on the straight and narrow, why can’t the Punjab government do the same? That when previously these contractors have satisfactorily worked with it, and it would save billions given to the NLC over the top,” the detractors question. Then there is the curious case of an NLC project collapsing quite spectacularly. Instead of the NLC being held responsible as the principal contractor after the Harbanspura Bridge collapse on the Lahore Ring Road, the owner of the sublet Khalid Rauf & Co. was arrested and proceeded against. “According to the agreement, the main contractor – here the NLC – is responsible for any accident or mishap, and the government has nothing to do with the subcontractor. But since the NLC is not required to deposit any security and more than a year had gone by, the NLC went scot free, leaving the hapless civilian contractor to cop the consequences,” the highway department insiders claim.