TI-P accuses Sindh of tempering with SEZA
TI-P accuses Sindh of tempering with SEZA

ISLAMABAD: Transparency International-Pakistan (TI-P) has accused Sindh government of altering Special Economic Zone Act, in case of Dhabeji Industrial Zone Project to extend favour to one specific party. In a letter to Chief Minister, Sindh, Syed Murad Ali Shah, TI-P said that it has received a complaint against alleged illegal act of processing functions of the Sindh Zone Authority formed under Section 10 of the Special Economic Zone Act 2012 through M/s SEZMC and conducting bidding process of Dhabeji Industrial Zone project.

In compliance with this provision, the Government of Sindh had established an Authority by the name of Special Economic Zone (SEZA) Sindh through notification on February 13, 2013. However, in 2018, Sindh government incorporated a company M/s SEZMC as a Section 42 company to undertake and perform the same functions as the M/s SEZA Sindh.

The documents of the M/s SEZMC specifically mention that the company is established to act as the Provincial Special Economic Zone entity, a body corporate under section 10(2) of the Act on behalf of Sindh government. M/s SEZMC is currently performing all the functions and exercising power envisaged under Section 17 of the Act and managing all the Special Economic Zone projects in Sindh on behalf of Sindh government, including but not limited to issuing Requests for Proposals (RFPs) and signing the contract for the projects to be undertaken under PPP mode.

According to TI-P, it is clearly evident that the acts of M/s SEZMC in the case of Dhabeji Industrial Zone Project are mala-fide and arbitrary, and without any merit. In the course of 12 months, the M/s SEZMC has re-issued the tender twice, with the last and most current action based on grounds of lack of best value for money.

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These mala fide acts and illegal acts have time and again been unaccounted and display a clear case of abuse of powers. M/s SEZMC is repeatedly providing undue opportunity to its favourite bidders to quote the highest (after making public existing current offers) and win the Project, despite the current offers already providing best value for money.

TI-P argued that with the current arrangement, most of the industrialists of Sindh will lose and the land will be sold by the blue-eyed contractor of the Government of Sindh to their few known industrialists.

Technical & Financial Evaluation Committee (TFEC) for Dhabeji Special Economic Zone Project on October 14, 2021 has announced that M/s Zahir Khan & Brothers (ZKB) as “Preferred Bidder” based on their highest present value of Rs16,250,000,000/- as per evaluation criteria given in the RFP. The evaluation criterion was amended after the RFP was issued and the minimum acceptable revenue was amended from Rs 17 billion to Rs 10 billion. Also some other criteria were amended, which indicates that these changes were made to favour a pre-selected bidder.

The whistleblower maintains that the co-existence of two entities under Section 10 (2) who are undertaking the same functions and exercising the same powers and the legal sanctity of the M/s SEZMC in the presence of an already existing and established authority under the Act is a grave concern that has remained unaddressed and unaccounted for.

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TI-P says M/s SEZA Sindh is constituted as per Section 10 (3), and the board of M/s SEZMC is not as per Section 10 (3), which calls into question the legality and validity of the composition of the board.

TI-P has questioned as to what basis is M/s SEZMC initiating projects, exercising powers under Section 17 of the Act when a valid statutory body, i.e., M/s SEZA Sindh is already in place and operating. The legal sanctity of the acts of M/s SEZMC in terms of replicating the acts/powers and functions of M/s SEZA Sindh is questionable, in the absence of any law that legalizes/sanctifies the transfer of powers and functions from an already established statutory body to another body corporate.

The reason of setting up M/s SEZA is that two members of Special Economic Zone Authority, Sindh are nominated by the Federal Government, Board of Approval, under Special Economic Zone Act 2012, who would be performing as members for ensuring best industry practices, principles of fair trade and competitiveness as the apex dialogue body and bridge between private investors and the provincial and federal government.

TI- Pakistan further contends that it has examined the allegations of the complainant and following are TI Pakistan comments: prima facie the allegations seem to be correct, as under the Act, the process of award on contract was to be carried out by SEZA, and not M/s SEZMC. The procurement process also is questionable on account of reduction of minimum acceptable revenue from Rs 17 billion to Rs 10 billion.

As per SPPRA Rules 2010, Rule 83 (1) “...the financial offers are not providing best value for money or need changes, the procuring agency may invite sealed revised financial bids from all qualified bidders or through open bidding”. Open bidding shall have been preferred. These changes in violation of SPPRA Rules 2010 indicate that the changes were made to favour a pre-selected bidder.

TI Pakistan has recommended that Chief Minster Sindh examines the allegations, and if they are found correct, take action against the gross irregularities in the award of contract by M/s SEZMC (a company), in violation of Special Economic Zone Authority, Sindh formed under the Special Economic Zone Act 2012.

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