The efforts put into constructing the second liquefied natural gas (LNG) terminal have come to naught as the winner of the tender, Akbar Associates, has committed wrongdoing by filing a fake bank creditworthiness certificate.
Sui Southern Gas Company (SSGC) has come to know that the creditworthiness certificate of Burj Bank, submitted by Akbar Associates on January 19 along with its bid to win the $400 million LNG terminal contract, was forged, show documents available with The Express Tribune.
Earlier, in a letter sent to Burj Bank on May 14, SSGC had requested it to verify the authenticity of the certificate and confirm that the bank had issued the document. However, the bank management in its reply the next day denied that any branch of Burj Bank had released the certificate and it was a fake document.
“This establishes that Akbar Associates committed a fraud in its LNG bid. Under the Public Procurement Regulatory Authority (PPRA) and tender rules, SSGC must disqualify and blacklist the company and en cash its $1-million bond,” an official familiar with the development said. However, he added, lobbies in power corridors still wanted to award the contract to Akbar Associates.
“We have not yet awarded the terminal contract to anybody and the matter of creditworthiness has gone to court, which will decide whether the certificate is fake or authentic,” said SSGC Board Chairman Miftah Ismail.
The SSGC board approved the bid on May 11, though the consultant had pointed out the bidder’s poor financial health and lack of experience.
In its technical evaluation report, the consultant highlighted the most glaring deficiencies.
It said Akbar Associates did not submit the project cost, capital structure and funding plan and bank documents in support of the principal sponsor’s commitment to financing the project. These were serious deficiencies in the information provided by the company, but despite that it was awarded 60% marks in this sub-section.
Financial statements for relevant sources of equity and letters for project financing submitted by Akbar Associates to establish the financial capability of the group were ambiguous. The consultant was of the view that based on the information provided it was difficult to confirm that the lead sponsor had sufficient assets to fund equity requirements.
The consultant also did not agree with the sponsor’s assertion that its proposal should be treated as 100% equity finance because of the reliance on illiquid real estate assets.
In its original proposal, the company had proposed a mix of debt and equity financing, however, later responding to the consultant’s queries, it changed the stance to 100% equity financing, which was a violation of PPRA rules.
The group, according to the consultant, was only capable of raising $9-12 million from its balance sheet. Now, the question arises how the lead sponsor (Akbar Associates), who is 80% equity holder, will be able to finance a project estimated to cost around $400 million, ask officials.
None of the three Pakistan-based companies of the Akbar Associates Group had submitted financial statements for the year ended June 2014 according to the requirement of the Request for Proposals, raising suspicion about the financial health of these companies.
In spite of these deficiencies, Akbar Associates was awarded 15 out of 25 marks in this sub-section whereas it should not have been given any score.
Published in The Express Tribune, May 26th, 2015.
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