Hoarding of raw material: CPEC projects cost may shoot up, PAC told

Panel expresses surprise over tendering of bridge at River Ravi before PC-I

ISLAMABAD: The country’s upcoming mega projects – including those related to the multi-billion dollar China-Pakistan Economic Corridor (CPEC) – may face escalation of cost as some companies have started hoarding raw material to create their shortage in the market.

This was revealed by the National Highway Authority (NHA) Chairman Shahid Ashraf Tarar in a meeting of the Public Accounts Committee (PAC), which on Wednesday examined the audit report of the NHA for year 2013-14.

“Some [companies] have started dumping material and there is going to be shortage of material in the market,” Tarar said while referring to the CPEC, which is a network of road and rail links that will join China to Arabian Sea through Gwadar Port.



In view of concerns of auditors and the stance of the NHA that rules allow them to adjust price escalation, the committee asked the NHA, the Pakistan Engineering Council (PEC) and the Auditor General of Pakistan (AGP) to come up with a decision over the price adjustment formula in 15 days.

Sardar Ashiq Hussain Gopang from the PML-N will oversee the price-adjustment activity. The NHA, according to auditors, had made overpayment of Rs52.58 million for a material which was never used. This adjustment was neither logical nor as per contract or the PEC price adjustment formula clarification, the AGP said.

The committee also expressed surprise over another case of tendering and construction of bridge at River Ravi at Syedwala, before approval of PC-I. This resulted in invalid bid amounting to Rs892.33 million with presumptive rates of Rs64.65 million and non-conforming execution of bridge structure involving excess expenditure of Rs288.37 million.

But the NHA chief Tarar stood his ground and defended the decision.

In another case, the committee was informed that a construction company was paid Rs301.21 million of secured advance in 2008 and 2012 for Kalat-Quetta-Chaman Road but the company neither did the work nor returned the money. The case is now pending with the Supreme Court.

The company was not named but the PTI’s Shafqat Mehmood rightly guessed that it could be none other than M/s Husnain Cotex. The committee had already discussed several other projects in which the same company was behind irregularities.

The committee expressed reservations over giving benefits to Husnain Cotex while awarding road contracts and suggested to blacklist the company.

Tarar said the said company was not given a single contract during the last two and half years except for a build, operate and transfer (BOT) based project in which the company has made 100 per cent investment.

“It is a company fit to be blacklisted,” observed PkMAP’s Mehmood Khan Achakzai.

Referring to media reports, AML chief Sheikh Rashid said the company was involved in offering furnished houses and other kickbacks for winning contract during the previous PPP government.

Audit pointed out that payment of Rs636 million in various projects was released to the company in escalation and variation cost and work was also awarded to it without any competition.

Published in The Express Tribune, March 10^th, 2016.