Penny wise, Pound foolish

  • Parliament’s Public Accounts Committee needs to do more than just nit-picking on project costs

Oct 4, 2017-

In Nepal, controversies never end when it comes to public procurement and tenders. In February 2015, the Finance Ministry (MoF) signed a $130 million agreement with the World Bank to build solar power plants, supply electricity to the Kathmandu valley, and mitigate electricity supply leaks. Of this, $37 million was earmarked for building 25MW solar power plants in Nuwakot. 

However, numerous obstructions have delayed the completion of the project, the latest of which is a result of the Parliamentary Public Accounts Committee’s (PAC) demand that the Raijin Energy Company of China, chosen by the Nepal Electricity Authority (NEA) to implement the project, be replaced. 

The project first hit a major roadblock when the then NEA chief Mukesh Raj Kafle picked a company that the World Bank deemed as “technically unqualified”. Sources say that Kafle picked one of the lowest bids tabled, disregarding whether the company fulfilled Engineering, Procurement, and Construction (EPC) ability requirements. The job then fell on current NEA chief Kulman Ghising to decide what to do next. Following WB procurement guidelines and Nepali law, Ghising picked a qualified company with a low tender bid from the bids already tendered. He decided against asking for a new round of tender submissions, as this would further delay the project. 

Nepali law mandates that an internal committee be formed by the relevant Nepali agency affiliated with an upcoming project to assess all submitted tenders. Following the identification of companies that have the EPC ability, the committee should then make recommendations for the agency chief to pick a qualified company with the lowest bid. It is important to note that the ability to complete a project comes before the cost of the project. Also, the law does not call for new tender rounds every time a selected company is rejected.

That the Public Accounts Committee (PAC) finds issue with the fact that Ghising picked a company from the bids already tendered, instead of calling for new submissions, is nothing more than nit-picking at this point. This is an attempt to save money at the expense of quality. In this project and similar projects, there is a bigger question to ask: In a bid to sound austere and populist, are we compromising on quality?

The PAC’s demand also runs counter to the fact that WB has defended the NEA, stating that neither does the NEA granting the project to Raijin breach WB guidelines, nor does it go against WB’s agreement with the MoF. When the lender is saying  the procurement process on a project that it is funding is fine, and that it adheres to Nepali laws, the PAC should take a step back to analyse its actions. 

It should let go of its obsession that the cheapest is the best, and look more closely at the value a company is providing in accordance with its technical ability and project completion history. It is time for Nepal to fulfil its potential in economic development, instead of wasting time on baseless accusations. 

Published: 04-10-2017 07:30

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