Scandal: FIA to probe purchase of transformers made from scrap

PEPCO annually spends over Rs25 billion to buy transformers.

Asad Kharal July 20, 2012


The Federal Investigation Agency (FIA) has opened a probe into misappropriation of billions of rupees annually on procurement of substandard transformers manufactured from scrap and recycled material, The Express Tribune has learnt.

The FIA will also investigate the issuance of fake prequalification certificates by Pakistan Electric Power Company (Pepco) officials to manufacturers having factories that do not meet the required standards.

The FIA Anti Corruption Circle (ACC) Lahore after authorisation of the formal inquiry has sought the relevant record from the authorities concerned.

The role of the Pepco officials and the manufacturers and suppliers involved in this scandal would be determined after examining of the records and the statements of the officials concerned, sources familiar with the matter told The Express Tribune.

The FIA has almost finalised the inquiry regarding use of substandard oil in the transformers instead of the specified grade oil.

The FIA has taken up this probe on the complaint of the Distribution Transformer Manufacturers Association China (DTMAC) as well as a source report, which has revealed the procurement of transformers manufactured from recycled and scrap material by Pepco.

DTMAC pointed out that the prototypes supplied by Chinese manufacturers were earlier rejected for using recycled core material in the manufacturing of transformers.

The complaint lodged by the DTMAC to FIA, stated about fast growing business of selling transformers to Pepco, manufactured with low quality material, at the rates of transformers manufactured with brand new material.

DTMAC alleged that the procurement agency was involved in issuing fake prequalification to some favourite persons for providing transformers, although they do not have appropriate manufacturing facilities.

As the transformers that the Pepco buys are made using scrap as core material, they last only one fourth the age of the transformers made with new silicon steel core.

In this way, Pepco officials have caused huge loss to the national exchequer, because the company annually spends over Rs25 billion on the purchase of transformers.

Transformers are key component in power transmission system. The National Transmission and Dispatch Company had specified code for the oil and silicon steel - two basic items used in manufacturing of transformers - to ensure the life of transformers for specified period. In this regard office of chief engineer (Design and Standards) Pepco Lahore had issued specifications DDS-84-2007.

The specifications make it mandatory for the manufacturers to import core material (silicon steel) from Western Europe, North America, Japan, Australia and New Zealand.

Published in The Express Tribune, July 20th, 2012.

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