PQA operations: AGP flags potential violations of policy, rules

KARACHI: A recent audit of the Port Qasim Authority (PQA) has revealed potential violations of Pakistan’s Merchant Marine Policy and procurement rules, raising concerns about the management of critical port operations and the development of local maritime expertise.

The AGP audit report for fiscal year 2023-24 highlighted two significant contracts awarded to a Chinese company. The first, valued at Rs 2,444.310 million (US$ 14.211 million), covers the operation of a locally purchased dredger from August 2021 to August 2026. The second, worth US$ 35.230 million (Rs 6,059.56 million), is for the manning, repair, and maintenance of the Indus Dolphin dredger over the same period.

These arrangements appear to contravene Clause 10(i) of the Merchant Marine Policy 2001, which requires Pakistani-flagged vessels to be crewed by nationals. The policy allows for foreign crew only when suitable Pakistani personnel are unavailable. However, auditors suggested that PQA may have failed to adequately train or recruit local crew members.

Of particular concern is PQA’s expenditure of approximately Rs 6 billion every five years since 2015 for the dredger’s operation - nearly four times its purchase price, raising questions on the cost-effectiveness of current arrangement.

Auditors also flagged tender conditions that seemed to favour the Chinese company, such as specific experience requirements that led to the disqualification of two local bidders, potentially violating the Public Procurement Regulatory Authority (PPRA) Rules 2004, which mandate fair competition and value for money.

Despite a 2012 agreement to train Pakistani nationals within three years, local crew members reportedly remain untrained after a decade.

The audit report said that PQA management defended their decisions, citing specialised operational requirements and the Chinese company’s technical qualifications. They also noted a lack of local expertise in marine operations. However, auditors view this as potentially sidelining Pakistani firms and extending undue favour to the foreign company.

In response to these findings, PQA has been directed to provide a timeline for training local personnel, submit a revised response to the audit, and address questions about their long-term strategy for developing local maritime expertise. They are also required to have the facts verified by the audit team.

Copyright Business Recorder, 2024