PAC orders special audit of locomotive deal

April 28, 2010

ISLAMABAD: The Public Accounts Committee (Pac) on Tuesday ordered a special audit of a 2007 locomotive procurement deal by the Pakistan Railways that allegedly caused the national exchequer a loss of Rs474 million.

At a meeting in the federal capital, the Pac expressed dissatisfaction at the 2008-09 audit and directed officials from the Auditor-General of Pakistan (AGP) to repeat the process. Riaz Pirzada, who chaired the meeting in the absence of the committee chairman Chaudhry Nisar Ali Khan, issued the directive after investigations revealed that mismanagement by the railway authorities caused millions of rupees losses to the national exchequer.

Pirzada and other members of the committee criticised railway officials for what they called “their irresponsible and callous attitude in such a big deal”. They called for identifying the errant officials and fixing responsibility. According to an audit objection prepared by the AGP in its 2008-09 report, the railways ministry had floated tenders for the procurement of 699 high-capacity wagons on May 31, 2007 through its Islamabad directorate. The $46.979 million offer of Chinese firm M/s Dongfang Electric Corporation was the lowest.

But it exceeded the amount of $39.070 million promised by the government through a foreign loan, necessitating revision of PC-1. A summary was submitted to the Planning Commission chairman on December 31, 2007. But the validity of the offer expired in the meantime, which the firm refused to extend. The Pakistan Railways again floated a tender – this time for the procurement of 550 wagons. M/s Dongfang was the only company that participated and quoted the rate of $38.471million, which was accepted.

Extra expenditure of Rs474.412 million could have been avoided by revising PC-1 within the validity period, the audit report concluded. Earlier, Director General Federal Investigation Agency (FIA) Zafarullah Khan told the meeting that the railways sustained close to Rs200 million losses when at least 5,000 metric tons of scrape was stolen from its warehouse in Lahore. He has already concluded an inquiry into the incident and will lodge a criminal case against the culprits, including some railway officials once it gets permission from the interior ministry.

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