Auditors expose serious faults in Peshawar BRT bus fleet

ISLAMABAD: The bus fleet of the Peshawar Sustainable Bus Rapid Transit Corridor Project was procured prematurely and resulted in a huge loss as the buses were kept off the road for over two years and developed faults.

A special audit report submitted by the Auditor General of Pakistan (AGP) to the Governor Khyber Pakhtunkhwa made shocking revelations about the serious flaws found in the BRT buses, worth Rs1.4 billion. The buses were procured much too early in the middle of 2018 when the infrastructure/civil work on the project was not yet completed. Serious flaws were identified in the buses by the auditors. Many of the buses developed mechanical problems or mysteriously caught fire forcing BRT services to be suspended for an indefinite period last week.

“Keeping the buses idle will reduce battery life and impact its warranty. Cost of a battery pack for one bus is USD33,870… The reservations of the CEO of Trans-Peshwar were also set aside, resulting in the premature delivery of 51 buses costing USD 7,932,030… Delivery of 51 fleet buses is considered premature and involved high risk of warranty period expiry as the buses are off-road…losses worth over Rs 5.038 million due to the premature delivery of fleet buses as worked out on account of depreciation of the hybrid batteries," the auditors said.

In a meeting held on April 16, 2018, the Chinese bus company that provided the buses confirmed that the battery needs recharging after every two or three days. According to the contract agreement executed between Trans-Peshawar and MS Xiamen Golden Dragon Bus Co. Ltd, China, for the supply of 220 fleet buses and maintenance/training services, “warranty for battery packs and electric motors shall be for 12 years vehicle life or 1.2 million kilometers of service, whichever milestone occurs first.” "51 fleet buses were supplied by MS Xiamen Golden Dragon Bus Co. Ltd, China, and the delivery note of the 20 fleet buses reveals that the condition of nine fleet buses is not satisfactory -- for example bumper damaged, dents & scratches and non-operational issues were recorded by the inspection officer," added the report.

The report also revealed accrued liability of additional cost of unnecessary early shipment of the prototype bus via the land route in violation of the contract worth Rs 3.525 million. The report also reveals wasteful expenditures of Rs716 million on beautification, construction of roads, repair and maintenance and electrification.

The report prepared by the AGP also points out irregularities of some Rs24 billion collectively, which according to the auditors was either wasted, misused, misappropriated or pushed into irregular payments and modes of uncertainty during the execution of the BRT.

The auditors further identified the BRT administrators' culpable negligence in illegal and unauthorized variations in the design worth Rs10.465 billion. According to the report, available with this correspondent, there was a detailed protocol for design change given by the Asian Development Bank (ADB) for a comprehensive procedure for making changes in the design where variation orders were made in the project design, having budgetary impact of Rs10.465 billion. The report also identified contradiction in the approved PC-I and business model regarding the annual subsidy worth Rs1.6 billion.

"The repeated deadlines of project completion i.e. June 2018, December 2018, March 2019 and June 2019 were made in complete disregard of the ADB apprehensions because according to the loan agreement between the ADB and the Government of Pakistan, the project was expected to be completed by June 2021," revealed the special audit report, soon to be tabled in the KP provincial assembly.

The KP government may now have to pay a larger subsidy for the BRT system. The Trans Peshawar management foresaw an estimated subsidy of Rs1.5 billion per annum for BRT operations, according to the audit report.

The construction supervision contract worth Rs Rs615 million and US$ 1.977 million was awarded without fulfilling the criteria for performance assessment of the consultant for phase i.e. the EPCM stage.

The audit also noted losses worth Rs160 million due to the application of higher rates in the contract of Reach-I awarded to Sgec-Maqbool-Calsons JV for the accepted contract. The auditors also noted a loss of Rs201 million due to the payment of excess quantity of pile concrete and irregular and unauthorised purchase of vehicles not provided in the revised PC-I worth Rs. 3.524 million.

The audit report also revealed non-imposition of penalty/liquidated damages worth Rs1.9 billion. It also highlighted losses due to non-recovery of machinery and non-recovery of cost of dismantled material worth Rs55 million. The report further revealed a loss to the government due to the non-forfeiture of a bid bond worth Rs20 million. The KP government did not show profit of Rs12.355 million and commitment charges worth $14.64 million are not reflected in the financial statement of the Peshawar Development Authority (PDA).

The report revealed the unauthorised and irregular payment from KP government shares worth Rs3.597 billion and the misappropriation of Rs6.378 million on account of watering/sprinkling on the BRT route in all the concerned reaches at Hayatabad and G.T. Road.

The AGP's report also showed unauthorized payment to officers out of PIU funds worth Rs46 million. The staff to whom the BRT allowance was paid were either not included in the list of staff given in the PC-I or were paid in excess of the posts provided in the PC-I, revealed the report.

The report further revealed unjustified payment for the registration and examination fee of pink buses worth Rs1.702 million. It also showed unnecessary expenditure on salaries of operational staff worth Rs 22.340 million and non-deposit of profit into the government treasury earned from a saving account worth Rs12.355 million. Salaries worth Rs96 million were paid without an approved pay structure by project managers. The report also revealed unauthorised payment of taxes and duties worth Rs6 million from ADB funds in violation of the loan agreement. It also showed inadmissible payment of income tax of Rs76 million of supplier by the government.

BRT spokesman Mohammad Umair Khan, in his official statement, confirmed that the BRT services had been suspended keeping in mind passengers' safety. The administration would resume the BRT's operation after a thorough technical check by Chinese experts. "Buses were fully warranteed," he said. He, however, did not comment on the expiry of warranty for mechanical failure of the buses, even though he was posed this question twice.

In their recommendations, the auditors also say inquiries and investigations where required should be conducted transparently so that the persons responsible for the loss of resources and time could be penalized accordingly.