ISLAMABAD: Auditor General of Pakistan has raised questions over transparency in awarding Rs 442 billion contract to a consortium of Chinese company Power-China and Frontier Works Organization (FWO), an military’s engineering wing of Pakistan for construction of the much-touted 48000-MW-capacity Diamer Bhasha Dam.
An annual audit of the Water Resources Ministry reveals that despite awarding this non-competitive award, WAPDA officials failed to follow their own advertised bid evaluation criteria hence raising the eyebrows of the auditors about the possibility of getting kick-backs in this multi-billion contract.
As per eligibility criteria defined by WAPDA local partner in Joint Venture (JV) business must have carried at least one water sector project
As per clause 2.5.1 of Eligibility and Qualification Criteria, as defined by execution agency WAPDA, local partner in Joint Venture (JV) business must have carried at least one water sector project (Dam, Hydropower, Canal, Irrigation and Barrage, etc.) amounting to Rs. 3 billion within the last 20 years.
The water and Power Development Authority (WAPDA) believed that the Frontier works Organization (FWO) was considered to qualify for construction of Diamer Basha on the basis of contract No. GZD-2. The agreements to construct the multipurpose Gomal Zam Dam including components pertaining to dam and hydropower section, irrigation, flood, and security components as well.
FWO in case of Gomal Zam dam was directly engaged in security component only
The watchdog agency AGPR claimed in its annual audit report on the basis of the available record that FWO in case of Gomal Zam dam was directly engaged in security component only, at a cost of Rs. 15 million per month, despite the fact that the FWO is an engineering wing of Pakistan military, not a security agency.
The federal audit agency AGPR disclosed in the report that the dam and hydropower component in case of Gomal Zam Dam was carried out by sub-contractor M/S Sinohydro Corporation whereas, the irrigation and flood protection component was worked out by another sub-contractor M/S AREEA constructions while FWO only undertook the security component of the dam.
The Auditor-General office claimed that above-mentioned facts about the performance of FWO were also mentioned in the Technical Evaluation Report of Mohmand Dam hydropower project where FWO was declared non-responsive on the basis of this experience in GZD. Moreover, the powerhouse of GZD was completed by Sinohydro Corporation (Sub contractor of FWO) was not working satisfactory since issuance of Taking-Over Certificate (TOC).
Power-China had not valid provisional/standard License from Pakistan Engineering Council (PEC) in the relevant category
The foreign partner of Diamer Basha joint venture (JV), M/S Power-China had not valid provisional/standard License from Pakistan Engineering Council (PEC) in the relevant category at the time of submission of a bid as required under clause 3.1 of the bidding document and they had only submitted an application for PEC License, as revealed by the AGP in its report.
In the light of available records and information collected, AGPR believed that instead of rejecting the technical proposal of M/S Power-China and FWO in line with JV despite knowing the fact that both entities had failed to fulfill the bid evaluation criteria, the executing agency of project WAPDA awarded them to extending undue favor hinting hefty kickbacks.
Joint Venture of Power China-FWO was signed at WAPDA Rest House in Islamabad on 13 May 2020
Agreement worth Rs. 442 billion for an award of construction of Diamer-Basha Dam and consultancy services with a Joint Venture of Power China-FWO was signed at WAPDA Rest House in Islamabad on 13 May 2020.
CEO Diamer Basha Dam Amir Bashir Chaudhry and authorized representative of M/S Power-China Yang Jiandu signed the agreement on behalf of WAPDA and the Joint Venture respectively.
Federal Minister for Water Resources at that time Faisal Vawda, Chinese Ambassador to Pakistan Yao Jing, Federal Secretary at that time for Water Resources Muhammad Ashraf, Chairman WAPDA Lt Gen Muzammil Hussain (R), E-in-C Lt Gen Moazzam Ejaz HI (M) and DG FWO Maj Gen Kamal Azfar were also present on the that occasion.
Soon after one week, on 21 May 2020, the Joint Venture Agreement Signing Ceremony between M/S Power-China and Frontier Works Organization (FWO) for construction of Diamer-Basha Dam was held at HQ FWO. Five members delegation, headed by Project Director Jiang Ruijun attended the ceremony.
AGPR recommended the federal government that matter must need to investigate at the apex level and fix responsibility
The audit agency AGPR recommended the federal government that matter must need to investigate at the apex level and fix responsibility for the award of contract in violation of bid evaluation criteria/PPRA rules and at a non-competitive price without open publicity.
The execution agency/employer of Diamer Basha Project decided to tighten the lips however one of the high officials on condition not to name directly dealing with the said project requested to consider management reply in the report as the response of WAPDA.