Home / JAN2016 / Agp Finds Faults In Nandipur’s Design, Decisions

Agp Finds Faults In Nandipur’s Design, Decisions

Agp Finds Faults In Nandipur’s Design, Decisions


Without naming names, the auditor general of Pakistan (AGP) has found faults with the design of the controversial Nandipur Power Project (NPP) and the decision-making of its management, board of directors and the Ministry of Water and Power.

In the conclusion of an audit report, compiled on the orders of the prime minister, the AGP noted that the post of managing director was specially created for an officer and a low-capacity fuel oil treatment plan was installed.

The AGP also noted that the final cost of the project was still within the approved limits of Rs58 billion. It did not report, however, that a revised cost estimate of Rs65bn was submitted to the National Electric Power Regulatory Authority (Nepra) early last month for inclusion in tariff setting.

 “[A] timely decision on operation and management (O&M) was not taken. Project has yet to be converted from residual fuel oil to natural gas although it is included in the revised PC-1,” the AGP said. “The question of whether to outsource O&M of the power plant or do it in-house is presently at the heart of the current problems afflicting the project,” it added.

The AGP said the main reason for the cost increase of Rs36 billion in the revised PC-1 was the delay in the provision of the law ministry’s opinion on foreign credit facilities, which could not be utilised for the timely clearance of plant equipment from ports.

It said that other reasons for the cost increase included the payment of US$67 million on account of additional engineering, procurement and construction costs. This was incurred under remobilisation compensation on account of extension of time and for the inspection, repacking, testing and repair of the plant through Amendment No. 2 to the contract agreement signed on August 2, 2013.

Another abnormal increase of around Rs11 billion was due to interest accumulated during the construction process, 25 per cent additional overhead rates, demurrage and detention charges and the non-quoting of rates of essential bill of quantities items by the contractors.

The actual quantum spent on the project as of August 31, 2015 was Rs49.912 billion, said the AGP. It noted pending liabilities amounting to US$ 9.559 million, Euro 0.391 million and Pak Rs521.027 million in respect of the contractor, an amount of US$25 million for conversion of project from residual fuel oil to gas fuel and an amount of Rs3.97 billion for laying a gas pipeline for the project, which will still remain within the approved cost of revised PC-1.

It said the project management wanted to outsource O&M, whereas the board of GENCO-III was extremely reluctant to accede to their repeated requests in this regard. At the same time, it did not issue any clear-cut orders to carry out O&M through staff trained for this purpose.

The AGP said the actual expenditure of the project was Rs49.912 billion, while the final estimated cost was Rs58.416 billion.

The AGP recommended that the issue of the O&M contract be resolved as soon as possible. “Any decision to outsource O&M or to do it in-house should be based on a detailed cost-benefit analysis of the two options as was repeatedly sought by the GENCO-III board of directors from the project management,” the AGP said. If O&M outsourcing is found to be a better option, then there must be an explicit approval from the highest forum.

It also recommended that those responsible for causing unnecessary delays at the early stages of project and ultimately causing huge cost escalation should be identified and prosecuted. Similarly, those who were responsible for non-compliance with the rules and contractual obligations in their decisions during project planning and execution should be proceeded against.

It also recommended that the capacity of the furnace oil treatment plant be raised to the level guaranteed in the contract agreement and that the plant be converted from furnace oil to natural gas as soon as possible.

A government-owned firm – Northern Power Generation Company Limited – in its regulatory filing had sought increase in the project cost to Rs65.35 billion, but Nepra is yet to give its determination on the request.

It is to be mentioned here that the National Accountability Bureau was also investigating the alleged Nandipur scam. Earlier, Chairman of the National Accountability Bureau (NAB), Qamar Zaman Chaudhry, had said that the first phase of the investigation into the alleged corruption and irregularities in the Nandipur Power Project had been completed. “The first phase of the investigation probes the project from its approval to the start of the project while the second phase of the investigation would concern an increase in the project cost and payments,” he said in a brief talk with newsmen after inaugurating the NAB Forensic Science Lab recently.

Asked whether anyone was pinpointed and identified in the first phase of the probe, the NAB chairman said unless and until the investigation was not completed, the Bureau did not want to incriminate anyone without the conclusion of the probe.

Earlier, after the inaugural ceremony of the NAB Forensic Science Lab, Qamar Zaman Chaudhry said the NAB had cleared 92 percent backlog of cases which have been pending for an extended period of time. “Around 1,133 cases were lying in the old pending list but a deadline for processing the pending cases was set (June 30, 2015) and 74 per cent cases out of the total were cleared in all shapes and forms in July this year,” he said.

 The NAB Forensic Science Lab has been established and made operational with an aim to equip the NAB with the latest technology to cater for its emerging needs to eliminate the menace of corruption from the society.

 The NAB chairman thanked the bureau’s workforce that worked diligently and achieved 92 percent clearance of backlog till the first week of October while remaining cases required further time and assured these would also be cleared soon.

 Enumerating the achievements and initiatives of the NAB, the chairman said the Bureau is striving to rid the nation of corruption and corrupt practices by adopting a zero tolerance policy across-the-board.

 He said a concept of Combined Investigation Team (CIT) had been introduced as investigation officers and prosecution were working as a team to ensure transparency and unbiased investigations.

 He said a system had been formulated to standardise the selection of cases. Priority is being given to cases as per the nature, the amount involved and number of affected persons, he said.

 The NAB chairman said corruption is a plague that has a wide range of corrosive effects on societies. Historically, it is evident that only those nations have developed and remained successful who have rooted out the menace of corruption and injustice from their societies. “In a similar manner, if we in Pakistan want to become a developed nation it can only be possible if we uproot corruption from our society and show zero tolerance against corruption,” he added.

 The chairman said the experience of 15 years of the NAB had shown that struggle against corruption was not the fight of one man-one institution rather the responsibility lies on every citizen. “We can only win this war through collective efforts of all segments of the society. We need to show cooperation and spirit to fight the monster of corruption,” he said.

 The NAB chairman said special emphasis was being laid on setting up character building societies in educational institutes across the country to build an effective edifice against corruption.

 He said the NAB had emphasised importance of students and given them an important role in the fight against corruption and added, in this respect, the NAB had signed an MOU with the Higher Education Commission (HEC). “As per the MOU, NAB has started developing Character Building Societies (CBS) in the universities, colleges and schools with the purpose to create an awareness amongst the students regarding the adverse affects of corruption and spread the message in their homes and communities and build alliances to tackle this monster at the grassroot level,” he added.

 He said the NAB was trying to create an awareness among the people about the effects of corruption and it was encouraging that for the first time anti-corruption had been made a part of development agenda in the context of governance. “Our experience at fighting corruption has led us to understand that enforcement alone cannot be cure to corruption. It requires a coordinated and a concerted effort with a three-pronged strategy of Awareness, Prevention and Enforcement,” he said.

 The chairman said responsibility to educate the public on ill effects of corruption and to make it aware of its adverse effects lies greatly with the media. It is heartening to see that media is playing a proactive role in this drive.

He said under its proactive approach, NAB has been engaging different governmental and non-governmental organisations and civil society in its fight against corruption and to help disseminate “say no to corruption” message from their respective platforms.

He said with the help of properly functioning Forensic Lab, Investigation Officers (IOs) probing different high profile corruption cases would be able to produce better and quick results for the NAB.

Currently, the NAB is taking help from other investigating agencies to meet its needs in cases where help of forensic experts is needed. He said the Forensic Science Lab (FSL) is established at the NAB Rawalpindi with three sections i.e. Digital Forensics, Fingerprint Forensics and Questioned Documents. “Establishment of a forensic lab will help in retrieving documents from electronic devices like cell phones, computers, iPads and networks and its preservation, to determine authorship of questioned handwriting, identity of questioned typescripts and printed documents, to detect forgeries in questioned documents, to determine interpolation, additions or overwriting and substitution of papers, and to work on questioned fingerprints for comparison and/or identification purposes,” he added.

In his welcome address, Director General, Training and Research, NAB, Husnain Ahmad, said NAB’s Forensic Science Lab was established with the state of the art equipment to cater to the requirements of all the three sections i.e. Digital Forensics Section, Questioned Documents Examination Section and Fingerprints Analysis Section.

He said the lab, in addition to meeting professional requirements, would also provide forensic services to other law enforcement agencies in the specified fields. He said the NAB Forensic Science Lab was now equipped with all the basic tools/equipment to give expert evidence in all the three sections. The officers posted at the lab, who possessed the basic qualification in these sections, were given training by AFP, UNODC, ICT Police, PFSA Lahore and FIA.

 He said the Ministry of Interior had notified the NAB Forensic Science Lab (NAB FSL) as the officially-designated laboratory for the purpose of producing evidence in courts. The NAB Forensic Science Lab has also been empowered to conduct analysis and examine Digital Media Devices (computers, cell phones, digital storage devices, etc), Questioned Documents and Fingerprints.

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