Rs 18 billion Uch-II project contract: Minister directs OGDC to cancel talks with KRL

Transparency International Pakistan (TIP) has appreciated that the Minister for Petroleum & Natural Resources, Dr Asim Hussain "has agreed with the recommendations of TIP and ordered cancellation of negotiation process with Khan Research Laboratory (KRL) and directed the Oil & Gas Corporation Ltd (OGDC) for strict compliance with Public Procurement Rules and tendering for over Rs 18 billion project.
Chairman of Advisory Committee, TIP, Syed Adil Gilani in a letter sent on July 12 to Muhammad Ejaz Chaudhry, Secretary, Ministry of Petroleum & Natural Resources, said that by agreeing to go for open bidding, instead of negotiating with KRL, which also not a consulting firm licensed by Pakistan Engineering Council (PEC), and does not have any experience of such works "the Minister has abided by the law of the land, ie Public Procurement Rules 2004, and PEC SRO 809(I)/86 for licensed consultants."
He further informed the Minister, the Secretary and Chairman OGDC that, according to Public Procurement Regulatory Authority (PPRA) notification of July 2008, article 3, bidding documents of PEC shall be used. PEC SRO 809(I)/86 is applicable on all procuring agencies and government agencies and selection procedure lays down that all consulting engineering services in Pakistan shall be entrusted only to consulting engineering firm duly registered as such with the Council. Further, selection of consulting engineers is done through open and fair competition, and no preference is given to any consulting engineer for reasons of his being in the public or the private sector. Even the World Bank guidelines do not allow any preference to government agencies, and open bidding is must in all loans.
Secretary, Ministry of Petroleum & Natural Resources, Muhammad Ejaz Chaudhry, in his reply sent on July 7 assured TIP that "the Government of Pakistan and OGDCL are mindful of the importance of Uch-II project for the country and shall follow all rules, regulations, etc, including the PPRA Rules in true letter and spirit." TIP in its letter of July 2 had requested the Minister to order cancellation of the negotiation process with KRL and to direct OGDC that it strictly complies with the Public Procurement Rules.
"Please be informed," the Secretary said, that OGDC is a public limited company quoted on the London Stock Exchange and the three stock exchanges in Pakistan. It has an independent board of directors and operates under the Companies' Ordinance and the code of corporate governance. OGDC is well aware of the importance of transparency of the tendering process and has followed all applicable rules and regulations with respect to the tendering process for Uch-II project, the Secretary said.
Adil reiterated appreciation for Minister's move of taking right decision in the national interest by ordering OGDC to re-invite public tenders. Adil in his letter sent to the Minister for Petroleum on July 2 had drawn his attention to the approval awarded by ECC for the contract of Uch-II Development Project without tendering by the Ministry to KRL which amounted to violation of Public Procurement Rules 2004.
TIP quoted from the Supreme Court order which had stated: "Here we may observe that it is duty of the court to ensure that the Public Procurement Regulatory Authority Ordinance 2002 read with Public Procurement Rules 2004 are adhered to strictly to exhibit transparency. It is universally recognised principle that such type of transactions must be made in transparent manner for the satisfaction of the people, who are the virtual owners of the national exchequer, which is being invested in these projects."
TIP had further said that the reason for creating urgency appears to be a self concocted reason, to bypass application of PPRA ordinance and PPR 2004 and awarding to KRL who do not have any experience of executing any such project in the past. Secondly Rule No 43 the circumstances invoked to justify extreme urgency must not be attributable to the procuring agency. In this case OGDCL has been at fault of not taking action in time, and as such rules do not allow negotiated bidding.
In view of this situation, TIP had requested the Minister to order cancellation of the negotiations process with KRL, and direct OGDC for strict compliance of Public Procurement Rules so that the project could be awarded within 45-60 days time, and that, too, to the technically best bidder and at the most economical cost.