LAHORE, Oct 24: In an exceptional variation of upwards revision, the National Transmission and Dispatch Company (NTDC) revised estimated cost of Neelum-Jhelum transmission line from earlier Rs20 billion to Rs25 billion – an increase of 25 per cent, within nine weeks.

According to the new estimates (3217/169/MM/01/394) submitted by engineering consultant, the line would cost $981,263 per kilometers instead of $800,000 as estimated in his the earlier report (3217/169/MM/01/372) on July 4, 2013. The NTDC accepted these new rates and awarded contract on their basis to a Chinese contractor.

This cost difference translates into around $5 million (around Rs5 billion) in foreign loan component for the line. Justifying the new rates, the consultant maintains that since the NTDC was building such line for the first time, he had difficulty in obtaining rates because of “absence of such line and material.” So, he drew rates from another feasibility study conducted for a similar line in the Northern Areas and calculated the new cost.

The NTDC management was sent a detailed questionnaire, seeking justification for acceptance of new rates and some accountability process for the consultant as his rates varied by 25 per cent in little over two months. The NTDC responded: “The matter has been put up to the Board of Directors for consideration and final decision.”

To make the matter worse, the new rates have been calculated at the dollar to rupee ratio was $1-Rs94.10. If the present market price of dollar, which is around Rs108, is taken into account, the figure could touch a massive Rs28 billion.

It may be mentioned here that the PC-I price, which was approved in last week of August this year, was around Rs13 billion for the entire project and one of the bidders had offered to build the line for Rs11 billion. The new price, on which the NTDC has given the contract, is thus more than double of the PC-I cost and over 150 per cent higher than that of the competitive bidder.

According to an official of the Central Contract Cell of Wapda, an authority for tendering process, “The rationale given by the engineering consultant is a novelty in itself and bespeaks volumes about his competence, or his vulnerability to pressure on him. In the age of instant communication, he claims not having rates of the material. Why he did not get rates, which is now a real time activity with emails in vogue; all international companies dealing in such lines and materials have huge presence on the net. If he actually did not, on what basis he prepared estimates in the first place? Such variation in such a short span of time should be a subject of departmental inquiry itself: blind acceptance by the NTDC only doubles up the suspicion. Passing the buck on the Board of Directors, constituted hardly two weeks ago and totally ignorant of this particular process that is more than two years old, is tantamount to cheating the board. The NDTC management is there to keep things transparent and ready for the BoD, not to trick it into wrong and cover-up decisions,” he concluded.

“Hiring an outsider consultant when the NTDC has its own planning division, designed to prepare PC-Is and engineering estimates for such projects, reflects something fishy,” says an NTDC official who did not want to be named. “It first hired an outsider and is now getting rates revised at will to accommodate a bidder. Its commission prepared the PC-I and estimated the cost at Rs13 billion for entire project, which includes expenditures like land acquisition and other allied expenses. New estimates are only for 85 per cent of foreign loan component. If 15 per cent money that the NTDC has to contribute and all other expenses are included, the project may cross the figure of Rs35 billion. This is horrendous, to say the least,” he claimed.