Mangla power plant: WAPDA undecided about turbine rehabilitation deal

Parent company of lowest bidder has been penalised by US court

ISLAMABAD:

The Water and Power Development Authority (Wapda) is in a fix whether to award a multibillion-rupee contract for six turbine generators under the Mangla refurbishment project to a French firm whose parent company has been penalised by a US court.

Under the project, which is being funded by Wapda and the US Agency for International Development (USAID), six turbine generators of the Mangla power plant will undergo rehabilitation.



Wapda’s legal consultant Saad Rasool Associates has cautioned against giving the contract to France’s Alstom Hydro, which interestingly offered the lowest bid among three competitors.

The consultant suggested that Wapda should not ignore the news about alleged involvement of Alstom’s parent company in corruption involving at least $75 million in secret bribes paid to government officials and different countries. The report was also highlighted by the US Department of Justice on November 13, 2015 and December 22, 2015.

The report stated that Alstom SA was directed by US District Judge Janet Bond Arterton of the District of Connecticut to pay $772 million in fine.



The consultant pointed out that Wapda under a clause of the contract conditions could not award project work to a company debarred, blacklisted or sanctioned by the Public Procurement Regulatory Authority (PPRA) and international agencies/departments of the US, World Bank, Asian Development Bank, European Bank for Reconstruction and Development, African Development Bank and Inter-American Development Bank.



Following these suggestions, Wapda could not figure out how to award the contract to Alstom Hydro.

Earlier, four companies had submitted bids for winning the contract in September 2015. These were Alstom Hydro, Voith Hydro Germany, Andritz Hydro Austria and OJSC Power Machines Russia. Since OJSC Power Machines could not make security deposits along with the bid, it was considered a non-responsive firm, which left three companies to compete for the project.

PPRA rules and a contract clause are clear under this situation. They say any firm that conceals any relevant information in its bid is considered ineligible for the contract. The French firm had not informed Wapda that a case was being heard against the company.

In a letter written to Wapda Director Legal Shahzad A Sheikh on February 24, 2016, the legal consultant cited clause 59.1 of the contract which says, “A bidder is prohibited from being awarded a contract if it is a subsidiary of a parent company that is debarred, blacklisted or otherwise sanctioned.”

“In view of the foregoing, the consultant firm recommends that Wapda conduct a thorough in-house technical and cost-benefit analysis in order to determine whether the participating company in fact forms a part of or is associated with a blacklisted/sanctioned company that has been mentioned in the US press release, in order to ensure that there is no adverse impact on the project or increase in Wapda’s risks associated with the same,” the letter said.



A senior Wapda official said they were evaluating the Alstom’s bid and would check the discrepancy, if any, committed by the French firm during the process.

He agreed that the World Bank had blacklisted the company last year and as a result it was barred from vying for the contract. Later, the sanctions were lifted. “We have entertained the firm after sanctions were removed,” he said.

An anomaly noted during the bidding process was that all bidders were bound to conduct two separate tests for the rehabilitation of turbine generators. However, Alstom conducted only one test.

Published in The Express Tribune, March 17^th, 2016.

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