Islamabad: A corruption story has come to light in the energy sector of Khyber Pakhtunkhwa where a loss of Rs 26 billion has been revealed due to the fraudulent division of the tender for the Gabral-Kalam Head Power Project (88 MW).
According to a document available with DND News Agency, Khyber Pakhtunkhwa Energy Development Organization (PEDO) invited bids for the Gabral-Kalam Head Power Project. The project was to be awarded to the “Gabral-Kalam Hydropower Consortium” which included the Chinese company “Guangdong Yuantian Engineering Company Limited” and the Pakistani company “RMS Private Limited”.
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The bid submitted by the consortium was at an unusually low price, which raised questions. The cost of the civil work was estimated at $64 million in the feasibility report, while this amount was increased to $124 million, which raised doubts. Further investigation revealed that the Consortium had submitted a fake bank guarantee for another project in Sindh and the same was already rejected by the Sindh High Court as a forgery document.
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The basis of the consortium’s feasibility and experience in some projects was also found to be questionable.
An inquiry committee was formed after these observations and it was found that the national exchequer suffered a loss of Rs26 billion due to the additional cost of $60 million in this project.
Project Details and Description
The project is being developed and currently owned by Swat Hydropower. Gabral-Kalam is a run-of-river project. The gross head and net head of the project will be 161m and 153m respectively. The penstock length will be 65m. The penstock diameter will be 4m. The project is expected to generate 339 GWh of electricity. The project cost is expected to be around $249.5m.
The hydropower project consists of 1 turbine with 13MW nameplate capacity and 2 turbines, each with a 37.5MW nameplate capacity.
The document of the project findings reveals that:
Initial Bid received – $64 Mn
Final bid enhanced – $124 Mn
Difference $60 Mn
KP Energy development organization had solicited bids for the Gabral Kalam HPP (88MW) project.
The project was set to be awarded to M/s Gabral Kalam Hydro Power consortium, partnership b/w Guangdong Yuantian Engraining Company Ltd of China, and local partner RMS Pvt Ltd of Pakistan.
The consortium had submitted a remarkably low tender price. Concerns were raised about the consortium eligibility criteria particularly, construction experience.
The cost of civil works was estimated as $ 64 Mn.
Suspicions of foul play emerged when the estimate was raised from $64 Mn to $124 Mn during translation from Chinese to English.
The consortium had multiple objections to its qualifications for the project.
Fake bank guarantee which was probed by SHC cfm its veracity.
To eyewash the public, an investigation was ordered by the executive committee under the chairmanship of Auditor General Pakistan.
Malafide intentions led to a huge loss to the national exchequer.
This shows a mega corruption of $60 Mn (Rs 26 Bn).
Details
Eligibility and Experience of the Consortium. The project was poised to be awarded to the Gabral Kalam Hydro-Power (GKHP) Consortium, comprising Guangdong Yuantian Engineering Co. Ltd. of China and RMS (PVT) Limited of Pakistan. Complaints questioned the consortium’s eligibility and relevant experience, suggesting that the projects cited as prior experience did not align with the criteria for hydropower projects. Additionally, both companies were alleged to have histories of fraudulent activities in Pakistan and internationally.
Unusually Low Bid. The consortium submitted a bid significantly lower than expected, especially considering the rising costs of materials essential for hydropower projects. For instance, the reported cost for civil works on a similar project was $64 million, whereas the required amount was $120 million. Suspicions arose when this figure was altered from $64 million to $124 million during translation from Chinese to English.
Submission of a Fake Bank Guarantee. The consortium had previously submitted a fake bank guarantee for a project in Sindh. The Public Accounts Committee had found RMS guilty of providing a fake guarantee, and the Sindh High Court ruled their actions fraudulent.
The government of KP to conceal the facts. In response to these allegations, the KP Energy Department instructed the Pakhtunkhwa Energy Development Organization (PEDO) to conduct a thorough investigation, ensuring transparency and adherence to established procedures.
