Competition Commission of Pakistan (CCP) has decided to involve federal investigation agencies to crackdown on those responsible for corruption in public procurement, as the Public Procurement Regulatory Authority (PPRA) has estimated $8 billion annual loss in the government sector, said a top official.
Abdul Ghaffar, Member Cartel and Trade Abuses of CCP, revealed in his presentation that Pakistan spends 25% of the total national output or $55 billion on public procurement and out of that $8 billion are lost either because of collusion or mis-procurement.
He spoke at the last session of two-day international conference on “Competition Enforcement Challenges and Consumer Welfare in Developing Countries”.
“By making the system effective the government can save at least $8 billion per annum”, said Ghaffar. The estimated saving is even more than what the United States intends to give in five years under the Kerry-Lugar-Berman Act.
“As a way forward, the CCP has decided to exchange information with the National Accountability Bureau and the Federal Investigation Agency to curb collusive bidding after PPRA’s disclosure”, said Ghaffar.
Planning Commission Deputy Chairman Dr Nadeemul Haque said that there were cartels that existed in the public sector with the support of the government and the CCP should take action against them.
CCP Chairperson Rahat Kaunain Hassan said that the PPRA did not have powers to enforce any penalty in case of unearthing a violation. “The PPRA law is defective and needs improvement,” she added. She said the cartelisation has become a norm in Pakistan rather than an exception.
She said that the CCP law applied on collusive bidding by going into prohibited agreements. The CCP is authorised to impose a penalty of Rs75 million or 10% of turnover on those found involved in collusive bidding for public procurement.
Ghaffar said Punjab and Sindh have enforced PPRA Rules, 2004 but in Khyber-Pakhtunkhwa procurement is regulated under Public Procurement of Goods Works and Services Rules, 2008 and in Baluchistan and Gilgit-Baltistan Procurement is managed by provincial departments under their purchase manuals.
Ghaffar said the public procurement was an area which was “highly susceptible to collusive bidding”.
Citing examples of collusive bidding that caused losses to the exchequer, Ghaffar said that Pakistan Jute Mills Association and its ten members colluded in supply of grain sacks, prompting the CCP to impose Rs23 million in fines. He said that the following year in the same nature of contract the government saved Rs250 million after it broke the cartel.
He said that in a case involding dredging companies, the CCP imposed Rs50 million in fines after unearthing a cartel but the parties went to the Sindh High Court and obtained a stay order.
Published in The Express Tribune, December 3rd, 2011.
Correction: An earlier version of this story erroneously stated Kerry-Lugar-Berman Act as Kerry-Lugar- Brahman Act. The correction has been made.