Public Accounts Committee (PAC) on Wednesday showed serious reservations over giving benefits to M/s Husnain Cotex (Construction Company) while awarding road contracts and underscored the need for blacklisting the company. While examining the audit report of the National Highway Authority (NHA) for year 2013-14, the audit department highlighted that the Husnain Cotex was awarded road contract by violating the PPRA Rules and the NHA contract code.
Members Committee expressed their displeasure over violation of contract provision and poor quality of road work and recommended the committee to black-list the company. Referring to media reports, Member Committee Sheikh Rasheed said the company was involved in gifting furnished houses and other bribe for winning the contract in previous government. Another Member Muhammad Junaid Anwar Chaudhry said the company was a part of a consortium which constructed the faulty Faisalabad Motorway. Moreover, Mahmood Khan Achakzai also criticised the company for awarding road contract in Zob (Balochistan) which is in a depleted condition and it must be black-listed. Shafqat Mahmood said that the committee members have serious reservations on the affairs of Hasnain Cotex and NHA officials were not in a position to comment on the issue.
Chairman NHA, Shahid Ashraf Tarar, informed the committee that the company has not been awarded any work since two and half years. However, a project with the company is in pipeline. It is a Build-Operate-Transfer (BOT)-based project and there is100 percent investment by the company. Audit pointed out that payment of Rs 636 million in various projects was released to the company in escalation and variation cost and work was also awarded without any competition.
Highway Rehabilitation Project, Lahore-Gujranwala Section was awarded to M/s Husnain Cotex at an agreement cost of Rs 4.9 billion. Audit observed that the NHA awarded an additional work "Construction of grade-separated interchange at Kala Shah Kaku" to the same contractor without open competition at an additional cost of Rs 385 million whereas the actual cost of project was Rs 5.2 billion.
The audit officials rejected the claims of Secretary Communication Khalid Masood Chaudhry that it was a World Bank-funded project and on their recommendations, the management of NHA awarded additional work to the same company. Member Committee Shafqat Mahmood commented that management should not follow the directives of the World Bank as it was lending and to be paid back by the government. Sheikh Rasheed observed that 40 percent of foreign funding went to corrupt elements as contractors were quite influential.
The committee was further informed that Rs 301 million of secured advance was recoverable from M/s Husnain Cotex. The audit observed that Project Director Kalat-Quetta-Chaman Road, Quetta did not recover the secured advance from the contractors despite a lapse of five years. The Chairman NHA replied that the matter has been pending in the Supreme Court of Pakistan as contractors also filed claims against NHA.
In his soft ruling, Chairman Committee Syed Khursheed Shah directed the NHA to discourage variation ratio and escalation cost in future. Management of NHA also failed to satisfy the committee over determination of steel price in development projects as contractor can claim escalation of five items including steel as per Pakistan Engineering Council's formula. The management said that NHA relied upon the price of steel notified by the Pakistan Steel Mills. Shafqat Mahmood contended that the Pakistan Steel Mills have been closed for last eight months, adding that "how can they notify the steel price?" The NHA management was clueless.
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