By the book: Wapda awards Rs14 billion project to ‘barred’ firm

Sinohydro, under investigation by the World Bank, gets contract for 128 MW-Keyal Khwar Hydropower Project

LAHORE:

The Water and Power Development Authority (Wapda) has awarded the civil works contract for the 128-mega watts (MW) Keyal Khwar Hydropower Project to a joint venture (JV) of Sinohydro and Hajvairy Associates.

Sinohydro has been debarred by the World Bank.

The Rs14 billion Keyal Khwar Hydropower Project is going to be constructed on a tributary of the Indus River in the Kohistan district of Khyber Pakhtunkhwa.

The project has been funded jointly by the European Investment Bank (EIP), the German Development Bank (KfW) and the government of Pakistan. The EIP and the KfW are providing 100 million and 97 million Euros, respectively, for the project.

According to documents available with The Express Tribune, Sinohydro was debarred by the World Bank in December 2013 and the investigation against it still continues.

According to a Central Contract Cell official, who requested anonymity because he is not authorised to talk to the media, Sinohydro Corporation, facing an investigation and impending suspension for alleged wrongdoing in an African contract, had applied under a new name, Sinohydro Group.

Any firm debarred by the World Bank is automatically blacklisted by the Public Procurement Regulatory Authority (PPRA). It can neither participate in bidding nor execute a project.

The affidavit provided to the Wapda by the bidders reads: “We, SinoHydro-Hajvairy (JV) hereby confirm that, Sinohydro Corporation Limited that was temporarily suspended by the World Bank, is a subsidiary of Sinohydro Group Limited, a leading company of Sinohydro-Hajvairy (JV).”

Wapda’s response:

In a written reply, a Wapda spokesman stated that the authority had not awarded any contract to a firm under suspension by any financial institution. “The contract for civil works of Keyal Khwar Hydropower Project has been awarded to Sinohydro-Hajvairy JV, which is a joint venture of Sinohydro Group Limited (SGL) and Hajvairy Associates Pvt Limited. The World Bank temporarily suspended Sinohydro Corporation Ltd (SCL), which is a different entity from SGL. Therefore, the question of violating rules of PPRA or financial institutions, including World Bank, does not arise at all.”

“The Compliance Department of the KfW has thoroughly investigated the matter and expressed its satisfaction with the matter after obtaining necessary clarifications from the stakeholders and assurances and issued a no objection letter (NOL) to the Wapda for awarding the contract for civil works of Keyal Khwar Hydropower Project to Sinohydro-Hajvairy (JV). It is on the basis of this NOL, that the Wapda has awarded the contract to Sinohydro-Hajvairy,” the spokesman said.

“Compliance with the procurement guidelines of KfW is part of the project loan agreement. The bank has been closely involved in monitoring the implementation of their guidelines during the entire bidding process,” the spokesman said.

The spokesperson had no comments on the financial status of Hajvairy Associates.

However, a senior Wapda official familiar with the project argued against the explanation. He noted that Sinohydro Group had no qualification as it had recently been established. “It uses all the relevant experience of Sinohydro Corporation. Wapda is trying to cover up for Sinohydro,” he said.

“The NOL from KFW does not absolve the Wapda of its responsibility,” the official said.

Published in The Express Tribune, October 6^th, 2014.