Body to Probe ‘Inflated’ Contracts of Past Govts

The Federal Cabinet has constituted a three-member Ministerial Committee to investigate road infrastructure and energy projects’ contracts awarded allegedly at inflated rates during the previous governments, well informed sources told Business Recorder.

The committee comprising of Minister for Communication (Convener) Murad Saeed, Minister for Energy Hammad Azhar and Minister for Information Fawad Chaudhary will submit its report to the Cabinet. Minister for Planning, Development and Special Initiatives, Asad Umar, who is defending CPEC projects with respect to transparency, has been kept out of the new committee.

The panel has been established at a time when Chinese companies are showing reluctance to engage in the second phase of the China Pakistan Economic Corridor (CPEC) due to Pakistan’s failure to meet the terms and conditions agreed with existing companies especially in the power sector, and in addition charges of enticement for projects established during the previous administration.

Background interviews with officials dealing with Chinese companies, discussions at a recent high level Joint Working Group of Pakistani and Chinese officials, as well as, available documents paint a depressing picture.

According to sources, the representatives of Chinese companies which have established power projects in Pakistan under the CPEC maintain that whatever agreements were signed should be honoured in letter and spirit and on a sustainable basis instead of raising the same issues again and again.

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The issue of overdue payment is one of the key factors, discouraging new investors. For instance, Chinese power companies’ overdue amount is about Rs 220 billion for which the representatives of these companies visit Power Division time and again and write letters requesting payment, but are not getting an encouraging response from the authorities due to a burgeoning circular debt hovering at around Rs 2.3 trillion.

During background interaction with authorities, it was revealed that the government is unable to clear the entire overdue amount of Rs 220 billion and is now trying to stagger the amount and most probably may opt for the same formula used to pay other IPPs i.e., in two installments – 40 per cent and 60 per cent.

On October 5, 2021, alluding to the latest disclosures by the Pandora Papers, the Prime Minister said if offshore companies were created for the purposes of tax evasion or money laundering, their cases would be referred to FBR and FIA, respectively, for proceeding as per law.

The Prime Minister also apprised the Cabinet that the comparison of National Highway Authority (NHA) contract rates of 2013 with the existing ones, reveal that road infrastructure projects undertaken during the past government were approximately Rs. 1 trillion more expensive. The primary reason was the transparency brought about by awarding contracts through e-procurement.

The PM exhorted the need for all Ministries/Divisions to switch to e-procurement at the earliest. It was suggested that a committee be constituted to examine the road infrastructure and energy projects contracts awarded allegedly at inflated rates during the previous governments and submit the findings to the Cabinet.

Concerns were expressed on prolonged stay orders by the courts, which inordinately delayed key government projects and other matters of public interest. It was pointed out that although the law provided that stay orders against the government could not extend beyond six months but the courts did not abide by this timeline.

The Prime Minister directed the Minister for Law & Justice to sensitize the Chief Justice on this important issue.

Transparency International-Pakistan (TI-P) has also asked the government to upload all contracts of previous governments and incumbent government on the website of PPRA so that the prices/costs could be evaluated.

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