LAHORE, Aug 18: Wapda has overpaid at least Rs 1.863 billion to a cartel of three local meter manufacturers during the last three years through closed-door purchases if the prices quoted in its current tender is taken as a benchmark. This amount has been charged from the consumers.

The manufacturers — Syed Bhais, PEL and Escort — have supplied over three million meters to Wapda at exorbitant prices of Rs 1,050 and Rs 1,125 per metre. All these purchases were made by bypassing the due process of open tenders and made through closed-door negotiations.

When Dawn pointed out the ‘irregularity’ in its issue of March 19 last, the Wapda authorities floated a tender on March 23 for 1.5 million AC single phase meters. Ten bidders participated in tenders opened on Aug 1.

Of the 10 bidders, Syed Bhais, Escort Pak Ltd, Pakistan Electron Ltd (PEL) and TIP Haripur quoted the same price of Rs 1,050 at which they have been supplying meters for the last three years. The Bahum Associates of China quoted Rs 768; SB Electronics Engineering & Control quoted Rs 897; ECC (China National Machinery) quoted 877; Shing Associates (through Kamal Electric Meters) quoted 775.37; Lasaf Folding quoted Rs 735 and the KZK asked for $5.3 per meter.

Later, the Shing Associates wrote a letter to the Wapda purchase department, further lowering the price from the earlier Rs 775.37 to Rs 702 per meter.

According to Wapda documents, these are C&F (carriage and freight included) prices and the supplier is supposed to deliver meters at places required by the authority all over Pakistan. In the supply terms, it means that the supplier will have to pay 25 per cent import duty (for importing a finished product), another six per cent income tax, around two per cent port clearing charges and two per cent inland transportation.

If these 35 per cent charges are deducted from the quoted price of Rs 702 per meter, the real cost of a meter comes to around Rs 456 per piece that Wapda has been purchasing at Rs 1,050 from 1999 and 2000.

The local manufacturers are at a distinct advantage of 35 per cent as compared to foreign suppliers. They get raw material duty free and pay import duty only on the finished parts of the products. These finished parts, in case of local manufacturers, do not go beyond three per cent of the total product. In this arrangement, even if the duty is included, it should not add a few rupees to the price. But in this case, the price was more than double for the first two years and was further raised in the year 2001.

A former member power told Dawn on the condition of anonymity that the Wapda had made a ‘mistake’ of floating the tender which had exposed the irregularity. “Now every care would be taken (at Wapda) to scuttle the process,” he claimed.

He apprehended that companies offering lower prices might not be allowed to get away with the order. “Either technical committee would exclude them on technical grounds or evaluation people would block their way.”

According to him, local suppliers along with those who made money in Wapda would make sure that the tender process is bypassed otherwise they would be on the chopping block for causing a huge loss to the exchequer.

A consumer said the Wapda authorities had been quietly passing these exorbitant prices to general public and must return this money to people, and those at the helm of purchase affairs be taken to task.

When asked to comment, a Wapda spokesman conceded the prices as being substantially low but claimed that: “These are only initial quotations. One has to ascertain if these bids are responsive (meeting technical needs of the tender) and the Wapda evaluators are working on it. The Wapda would only be in a position to comment on them with some authenticity once report of the evaluation committee is finalised and submitted.”