Bank guarantee: TI Pakistan takes up issue of exemption to NLC

Transparency International Pakistan has taken up the issue of exemption from providing bank guarantee against performance security and mobilisation advance granted by the Planning & Development Division to M/s NLC on June 29, 2000 with Minister of Finance, Dr Abdul Hafeez Shaikh, describing it "against the Public Procurement Rules 2004 and the Competition Act 2010".
In a letter sent to him on February 9, Adviser, Transparency International Pakistan, Syed Adil Gilani has enclosed the letter written by Ministry of Ports & Shipping to Port Qasim Authority (PQA) on April 10, 2009, informing PQA that Planning & Development Division has given exemption from providing bank guarantee against performance security and mobilisation advance, and also deduction of retention money.
According to PPRA Ordinance 2002 and the Public Procurement Rules 2004, the contract should be awarded to the lowest responsive bidder based on the compliance of the requirements of tender documents which includes provision of bid guarantee, performance guarantee, mobilisation advance guarantee, providing all insurances and deduction of retention money, he said.
Gilani said that the above requirements are estimated to cost from 7% to 10% of the bid cost and non deduction of WHT 6%, provides an edge of about 13-14 % in the competitive prices of the tender. By providing these exemptions to M/s. NLC, the competition is not in accordance with the level playing field with other bidders, which is against the PPRA Ordinance 2002 and the Public Procurement Rules 2004.
The Competition Commission of Pakistan also does not allow any edge / favour to a particular competitor in a tendering process. TI Pakistan has requested the minister to examine the adverse consequences of this directive issued 12 years ago in 2000 (which was much before the promulgation of PPRA Ordinance 2002 and the Competition Act 2010).
The act of Planning Commission of Pakistan by granting this exemption to NLC is not only illegal under PPRA Ordinance, but also amounts to almost nationalisation of construction Industry, and has caused irreparable damage for the existence of Pakistani construction companies, as most of the reputable firms like M/s MLC, M/s Gammon, M/s Interhome, etc have become non entities. TI Pakistan is striving to have Rule of Law in Pakistan.