Multan-Sukkur Motorway: NHA fails to satisfy Senate panel on award of contract

The National Highway Authority (NHA) Friday failed to satisfy the Senate Standing Committee on Communications over awarding work of Multan-Sukkur Motorway, executed under the China-Pakistan Economic Corridor (CPEC) framework, to a Chinese company at Rs 294 billion against the engineering estimates of Rs 248 billion. The parliamentary panel also raised concerns over neglecting the western route under the CPEC, saying that Rs 5 billion are being earmarked every for the last three years for land acquisition but a not single inch of land has so far been acquired.
The committee met with Daud Khan Achakzai in the chair. NHA Chairman Jawad Rafique Malik briefed it on different matters including Multan-Sukkur Motorway. The committee was informed that M/s China State Construction Engineering Corporation has been awarded the work of Multan-Sukkur Motorway (392 kms). The work commenced on 5th August, 2016 with completion date as 4th August 2019. The contract cost is Rs 294.352 billion. The progress of work at present is 43 percent where 19,000 Pakistanis have been given jobs.
The original bid of M/s China State Construction Engineering Corporation was Rs 406.332 billion. However, the finalized price was Rs 294.352 billion. In this manner, a total saving of Rs 111.98 billion was achieved. The committee was further informed that during the deliberations, a reduction in the bid price of Rs 19.047 billion was obtained from the bidder on account of exemption from customs duties/taxes on equipment and construction material. However, the committee members objected why negotiation was held only with one company and not with others. The NHA informed that as per Public Procurement Regulatory Authority (PPRA), negotiation is not allowed with any bidder but it was held on technical basis. The revised PC-1 of Rs 298.008 billion envisaging such an exemption was approved by ECNEC on 19th December 2015. The government of Pakistan initially granted setoff in the customs duty for the import of equipment/machinery for Rs 8.149 billion and SRO was issued by the FBR on 27th July 2016.
The government of Pakistan later approved the 2nd part, ie, setoff in the customs duty for Rs 10.898 billion for import of construction material in ECC meeting held on 22nd December, 2017. The SRO was issued on 24th January 2018. It may be clarified that this is not a case for exemption of customs duties, etc. The contractor has been given a setoff of Rs 19.047 billion already taken from his bid and once this amount gets exhausted he will be paying in cash duties/ levies, etc, to the FBR.
The GOP has retained lump sum amount of Rs 19.047 billion against customs duties, levies and other relevant taxes on goods/material to be imported and contractor will be allowed setoff against these amounts as and when imports take place. From the above, it can be concluded that if this setoff had not granted, an addition of Rs 19.047 billion would have been added to the loan thus increasing the loan and interest amount, the NHA officials added.
They further said that the contract was processed and awarded as per the prevalent rules and regulations with total transparency and there is no question of violation of any rule in this regard. However, the NHA failed to satisfy the parliamentary panel and the matter was not disposed of and it was decided to carry it after the Senate election.
The chairman NHA said that motorway network was 582 kms till 2013, which is going to be extended to 2,400 kms by 2020. The committee was further informed that the Prime Minister had directed NHA to conduct feasibility study for the construction of 200 kms Bajaur-Zhob link road to connect CPEC western alignment. The project is reflected in PSDP 2017-18 with an allocation of Rs 250 million. Further FATA Secretariat has been consulted and feasibility study for FATA Expressway, 933kms, is under process where Bajaur-Zhob section is part of it.
Chairman NHA Rafique Malik assured the committee that they would try to submit PC-1 to the Planning Commission by end-June 2018 and execute the 200km portion in the next financial year.The NHA proposed Rs 823.13 billion for 103 projects under the Public Sector Development Programme (PSDP) 2018-19.