Sukkur-Multan Motorway project: Chinese company responds to minister’s allegations

ISLAMABAD: A Chinese company has reacted to, what it terms, the “groundless allegations” of the Minister for Communication Murad Saeed who raised questions about the award of Sukkur-Multan Motorway project by the PML-N government to the company which “feels extremely shocked” at the nature of accusation.

In a rare clarification issued Tuesday, China State Construction Engineering Corporation (CSCEC) without naming the minister has said it “feels extremely shocked by the recent groundless allegations made through media. The whole tendering, bidding process and award of the contract was made in accordance with local laws and international practices which, the company says, it won after declared the lowest bidder. CSCEC is the largest investment and construction corporation in the world.

Murad Saeed in a press conference on February 8 had levelled serious allegations wherein he accused former prime minister Nawaz Sharif and former planning minister Ahsan Iqbal of showing indecent haste in signing the Memorandum of Understanding (MoU) with CSCEC for the preparation of feasibility study, PC-1, design and the execution of the Sukkur-Multan Motorway project. He further alleged of awarding the project at Rs60-70 billion higher price. He also accused Javaid Sadiq, the company’s marketing director in Pakistan, of executing this scheme right from MoU signing till the award of the contract and was rewarded by the company for doing this. In past, Prime Minister Imran Khan declared Javaid as the “front man” of Shahbaz Sharif during a press conference.

However, background inquiries by The News found that Javaid failed to get any contract from Punjab government for the companies he represented despite offering the lowest bids except this motorway project and a small part of Quaid-i-Azam Solar Project.

Regarding the MoU of motorway project, CSCEC said in its statement that the memorandum was signed with the government in July 2013; it was a non-binding document and valid for a period of one year that expired on July 4, 2014 while the bidding process started in June 2015 thus the said MoU had no influence over the whole bidding process.

Murad had alleged that Javaid took Nawaz Sharif and Ahsan Iqbal to the CSCEC’s office for signing MoU in 2013. The facts gathered by The News found that former PM was then on China’s official visit and he met with different companies’ delegations including CSCEC at Diao Yutai State Guest House in Beijing and during his train ride from Beijing to Shanghai and Guanzhi. He didn’t meet CSCEC representatives at the company’s office.

The MoU signed, it has further been confirmed from the document, was a non-binding agreement as it clearly stated that “nothing in this MoU binds GoP to perform beyond its lawful authority or in relaxation of any rules/laws at that time.” Its clause 5.3 further stated: “This MoU is neither a fiscal nor funds obligation agreement. Specific activities that involve creation of rights between GoP and CSCEC shall require execution of separate agreements or contracts strictly in accordance with the laws of Pakistan.”

Contrary to Murad’s claim, the MoU was not related to preparation of feasibility or PC-1 and neither did CSCEC prepare PC-1 for the project. It was done by NHA, Murad’s subordinate department. However, the fact remains that CSCEC prepared a feasibility study free of cost on the request of the Ministry of Communication in August 2013. The ministry’s letter clearly stated: “It is understood that the feasibility study would not construct any obligation upon GoP in contradiction to Article 5 (5.2) of the MoU.” In the meanwhile, NHA signed another MoU with another Chinese company for the survey and design of the Hyderabad-Lahore section of this project in June 2014.

Murad alleged that the company was awarded project three years after the signing of the referred MoU and in the meantime, CSCEC prepared a PC-1 having a project estimate of Rs242 billion and total cost Rs259 billion. However the same company submitted its bid of Rs406 billion, he said. It is mentioned in their minutes, Murad continued, that the “bid price was reduced to Rs111.98 billion, only non-essential items were deleted during the deliberations without compromising the functionality of the motorway.”

In other words, Murad inferred, CSCEC first quoted the items which were not needed and subsequently removed these items from the bid and government shows it had saved Rs111.96 billion.

Regarding the selection of the company, The News investigation has determined, that three Chinese companies were formally nominated by the Chinese government and CSCEC was one of them which means Pakistani government had no role in naming the companies participating in the bid. Subsequently, NHA initiated the bidding process.

CSCEC maintains that its bid was not high considering the scope of work, employer’s requirements which were significantly higher that what CSCEC used for preparing its cost estimate provided in the feasibility report submitted to NHA in 2014. These requirements were even higher than the PC-1 prepared by NHA itself contrary to Murad’s claim that it was done by CSCEC with a cost estimate of Rs259 billion.

The company explains the cost items that increased the bid price not earlier estimated during the feasibility stage. They are: use of LTE dedicated frequency for the Intelligent Transport System (ITS), inclusion of taxes and duties, formation of granular material platform for flood protection, construction of 235km service road, defects notification period up to three years against normal one year, increase length of the project by 14km, more bridges and service areas etc.

“Numerous meetings were held between NHA and CSCEC to optimize/rationalize the employer’s requirements, design, scope of work and terms & conditions. As a consequence of these exhaustive meetings, the prices were rationalised, and the bid price was reduced by Rs111.98 million,” a company official told The News.

Murad during a TV programme had alleged that Javaid Sadiq was made CSCEC’s shareholder and director after successfully making this deal and getting the MoU signed for such a mega project. Previously, he was working as a commission agent, he alleged.

Contrary to his claim, the company’s documents show Javaid has been working as a marketing and project consultant for Pakistan since 2006 and he was appointed its director and shareholder in 2012 when it was registered in Pakistan, well before the MoU was signed.

In past, Imran Khan alleged Javaid as “front man” of Shahbaz Sharif. However, record indicates that Javaid participated in bidding process of several projects of Punjab government and companies he represented declared the lowest in price but projects were awarded to other companies. Khadim-e-Punjab Ujala Programme, a project of 100 megawatt of Quaid-i-Azam solar project, Lahore Safe City project and Safe City projects of five other cities are included among them where they were not awarded contract.

In the case of solar project, Javaid even moved Islamabad High Court.