MUSHTAQ GHUMMAN

ISLAMABAD: The federal government is likely to amend Public Procurement Regulatory Authority (PPRA) 2004 rules to facilitate Chinese companies in awarding EPC contracts for East Bay Expressway project for which China will extend an interest-free loan.

Official documents available with Business Recorder reveal that while considering a summary regarding the grant of EPC contracts to the firm(s) nominated by the Government of China, the ECC in a meeting held on January 29, 2016 constituted a committee under the chairmanship of Ministry of Climate Change to examine the applicability of Rule-5 of the PPRA Rules, 2004 and submit a report to the ECC.

Accordingly, the committee held a series of meetings and unanimously concluded that in the light of legal provisions and the facts relating to framing and notification of the Rules, the conditions prescribed in section-21 of the PPRA Ordinance, by the PPRA while processing the grant of contract(s) to the firm(s) nominated by the Government of China described as permissible under Rules-5 of PPRA. However, the Commerce Ministry argued that strict application of section-21 of the Ordinance requires that the PPRA in future may process each case separately and submit its recommendations to the Federal Government on case-to-case basis and/or some appropriate amendments may be made in the Ordinance to further clarify the relationship of section-21 of the Ordinance with Rule-5.

In the light of the committee’s recommendations, Ministry of Ports and Shipping submitted the following proposals for consideration of ECC of the Cabinet: (i) permitting of GPA to proceed with the procurement of one of the three-listed Chinese companies, as well as preference for use of the Chinese equipments as per the framework agreement under section 21 of PPRA Ordinance, 2002 and Rule 5 of the PPRA, 2004 ;(ii) The Public Procurement Regulatory Authority (PPRA) for strict application of section 21 the PPRA Ordinance 2002, should process each case separately and submit its recommendations to the federal government on a case-to-case basis or some appropriate amendments may be made in the Ordinance to further clarify the relationship of section 21 of the Ordinance with Rule-5.

According to article two of the framework agreement between Pakistan and China, the Chinese companies shall be responsible for Engineering design, Procurement and Construction (EPC) and supervision work of the projects. Identification of the Chinese companies for execution of each project from amongst the recommended companies through bidding process has been agreed. Accordingly, the Chinese side has provided a list of the recommended Chinese companies for each process as follows;(i) M/s China Communication Construction Company (CCCC);(ii) M/s China State Construction Engineering Company (CSCEC) and ;(iii) M/s CATIC.

The PPRA maintained that Article Two and Article Three of the signed agreement militate against the provisions of the PPRA 2004. Rule 5 of the Rules provides that whenever these Rules are in conflict with an international treaty or an agreement with a Sate or States or any International Financial Institution the provisions of such international treaty or agreement shall prevail to the extent of such conflict.

The ECC, in its meeting on June 14, 2016 , allowed the Gwadar Port Authority (GPA) to proceed with the procurement of one of the three listed Chinese companies through a bidding process as well as preference for the use of Chinese equipments as per the framework agreement, under section 21 of the PPRA Ordinance, 2002 and Rule 5 of the PPRA Rules, 2004; and directed PPRA for strict application of section-21 of the PPRA Ordinance, 2002, to process each case separately and submit its recommendations to the federal government on a case-to-case basis or to make some appropriate amendments to the Ordinance to further clarify the relationship of section-21 of the Ordinance with Rule-5.