Ministry asks NHA to scrap Rs36 billion road contract

[Salman]

ISLAMABAD: A high-level probe committee of the Communications Ministry has found the Rs36 billion road project of NHA, contracted to a Chinese company, as illegal as it was signed without the approval of the competent authority and in violation of the directions of the prime minister and even the NHA executive board.



The Communications Ministry has sought immediate scrapping of the project During the recent weeks this is the third mega project, signed with Chinese companies under dubious conditions, facing the threat of cancellation. Just a few weeks back the Supreme Court of Pakistan declared the Rs21 billion Safe City Project as illegal whereas the Cabinet Division has lately raised questions about the validity of two projects worth Rs160 billion, signed by CDA with Chinese companies.



On Oct 2, 2012 the Communications Ministry formally approached the NHA announcing that its probe committee had found the agreement signed between NHA and M/s CGGC for Jaglot-Skardu road project worth Rs32 billion as legally not tenable and therefore it needed to be scrapped forthwith.



“It is a matter of grave concern that the project has been contracted with utter disregard to the norms of transparency, without undertaking cost rationalisation with the required degree of diligence,” the Communications Ministry’s letter to NHA said after the inquiry report’s finding that not only the project was awarded to the Chinese company in a doubtful manner but the cost of the project was also escalated from Rs22 billion to Rs32 billion.



Such haste was shown by the NHA to sign this agreement with M/s CGGC that, according to the official documents, even the directions of the prime minister and the objections of the NHA executive board were ignored.



“It is evidently intriguing that NHA hastened to sign the subject MoU without first addressing clear directions of the prime minister recorded on the summary which was mandatory, and later contracted the agreement in spite of recorded objections raised by NHA executive board in its earlier meeting.”



It has been revealed that PPRA rules were also violated in this case. The NHA was therefore told: “Both MoU and the contract Agreement signed with M/s CGGC in their present status in violation of the prescribed procedures are legally not tenable and therefore need to be scrapped forthwith. NHA must first get approval of the competent authority on the MoU signed with M/s CGGC. Thereafter fresh bids should be invited strictly adhering to PPRA rules by advertising in the international as well as local media. Bids so received be evaluated thoroughly by a notified committee comprising professionally competent officers who must evaluate and rationalise the cost item wise. After obtaining formal approval of the executive board, NHA may proceed to contract agreement with the bidder whose bid is competitive on account of cost of design efficiency.”



The probe committee in its report has revealed that the contract agreement was signed without approval of NHA executive board and without adhering to the observation of the prime minister, Finance Division and the Law Ministry.



Only recently, the Supreme Court declared Rs21 billion Safe City Project illegal with directions to NAB chairman to proceed against the responsible. “Let a copy of this judgment be sent to the chairman NAB, who shall ensure that appropriate proceedings are initiated in accordance with law,” the Supreme Court judgment noted.



In the Safe City Project, a summary for the prime minister for exemption of the procurement from Public Procurement Regulations 2004 was moved by the then secretary interior, and approved by the then Prime Minister Yusuf Raza Gilani after endorsement by the secretary finance.



The Planning Commission and the chairman of CDWP and member of Ecnec also played an instrumental role in approval of the project despite serious objections on cost and proprietary nature of the project raised by concerned wings of the Planning & Development Division and deputy chairman’s predecessor, Dr Ishfaq Ahmad in a note for the prime minister dated 15 April, 2010.



The project involved installation of 1,500 security cameras at various locations throughout Islamabad to make the city safe from terrorist attacks, thus deriving the name “Islamabad Safe City Project”. The News first broke the story of embezzlement and corruption in the project on 10 December, 2010 and based on The News stories, some civil society activists filed petitions in the Supreme Court in public interest.



Of late The News also reported the case of serious rift between the Cabinet Division and the CDA over the signing of two MoUs with Chinese companies worth Rs160 in the first week of June this year.



Cabinet Division sources insisted that not only the division was ignored but there had been no hint of these MoUs even to the Finance Ministry, the Law Division and the Economic Affairs Division. The prime minister and even the cabinet had not approved what was signed between CDA and Chinese companies.



The then CDA Chairman Farkhand Iqbal, however, when approached, said that what could be more valid than the fact that these MoUs were signed in the presence of the top officials.



He added that one of the two MoUs relates to the $1.2 billion (Rs 110 billion) worth project of conduction of water from Indus River System at Tarbela Dam to Islamabad and Rawalpindi, which was approved by the prime minister as well as all concerned federal authorities.



About the second project worth Rs 50 billion to build 6,000 flats in Sector I-15 Islamabad, the chairman CDA said that the MoU was signed in China after the already engaged Chinese company was getting in bad shape and had suggested that its consortium company be engaged for the same project.Iqbal said that the CDA was in the process of getting all required sanctions from all different authorities.