Rooppur Green City project electrical equipment bought at nearly 8 times cost, audit finds

Highlights

• CAG found Tk186.88 crore loss from overpriced electrical equipment procurement.
• Contractors received nearly eight times justified prices through alleged collusion.
• Audit cited inflated estimates bypassing PWD Schedule of Rates-2018.
• CAG raised Tk294 crore audit objections across 10 procurement irregularities.
• Pillows and dressing tables purchased at grossly inflated prices.
• Audit recommended action against officials and recovery of misused funds.

Electrical equipment for sub-stations at the Green City housing project of the Rooppur Nuclear Power Plant was purchased at nearly eight times the justified price, causing the government a loss of around Tk186.88 crore, a special audit by the Comptroller and Auditor General (CAG) has found.

According to the audit report, overpriced equipment was purchased for installing a 1,660kV electrical sub-station, generators, lifts for 11 buildings, air coolers, solar panels, CCTV cameras, fire hydrants, internet connections and centrifugal pumps.

Three contractors – Mazid Sons Construction Limited, M/S Sazin Enterprise and MSCL-GKBPL (joint venture) – supplied the electrical equipment.

The audit report said the electrical products supplied by the three contractors should have cost around Tk27 crore. However, without following the PWD Schedule of Rates-2018, the authorities paid Tk213.88 crore to the contractors through collusion.

According to the audit calculation, the contractors were paid 7.92 times more than the justified price for the electrical equipment. The CAG said this caused the government a loss of around Tk186.88 crore.

In its audit observation, the report said financial benefits were given to the contractors by preparing cost estimates at rates higher than the market price and the Schedule of Rates without forming an estimate committee.

The audit recommended taking administrative action against the members of the tender evaluation committee, those who approved the bills and those who made the payments, and recovering the objected amount for deposit into the government exchequer.

The CAG audit team also found irregularities in several other areas of public procurement, including the purchase of pillows and dressing tables at inflated prices, payment of bills to contractors despite non-supply of specified products, payment against 70% excess measurement in rod lapping without following design instructions, failure to deduct VAT at source from contractors' bills, and signing contracts without seeking explanations for abnormally low rates submitted by contractors before paying increased contract values for supplied goods.

In total, the CAG raised audit objections involving Tk294 crore under 10 heads, saying the amount represented losses to the government.

The constitutional body found the irregularities during a compliance audit of the accounts of the housing buildings, known as Green City, under the Rooppur Nuclear Power Plant project for the FY2016-17 to FY2020-21 period.

According to the audit report, the Green City housing component of the Rooppur Nuclear Power Plant project had a budget of Tk2,725 crore over five years, from FY2016-17 to FY2020-21. Of this, Tk2,228.98 crore was spent.

The CAG submitted the audit report to the president, detailing the irregularities. 

Asked about the audit report, a CAG official, requesting anonymity, told The Business Standard, "The irregularities found in the audit have been mentioned in the report. The government may take action on the matter if it wants."

Asked whether any action had been taken, the official said they were not aware of any such development yet.

Pillows bought at inflated prices

According to the CAG report, the government suffered a loss of Tk3.92 crore due to the purchase of pillows at prices higher than the market rate.

The audit report said Tk5.41 crore was paid to Sajin Construction and Mazid Sons Construction Limited for purchasing 4,702 pillows. This means each pillow cost Tk11,503 on average.

However, the audit team purchased similar pillows and found that the market price of each pillow, including cover, transport cost, overhead and profit, was Tk3,154. On that basis, the total cost of the pillows should have been Tk1.48 crore.

The report said the office of the executive engineer of the Public Works Department in Pabna prepared an estimate of Tk9,307 for each pillow, three times higher than the market price, to provide undue benefits to the contractors.

Of the pillows, 73 were bought at Tk29,847 each and 60 were bought at Tk89,900 each. As a result, the government suffered a loss of Tk3.92 crore in the purchase of 4,702 pillows, the report said.

1,342 dressing tables bought at Tk3.33cr loss

According to the CAG audit report, 1,342 dressing tables were purchased for the Green City project for Tk7.43 crore.

Of them, Tk3.02 crore was paid to Sazin Construction for supplying 669 dressing tables, while Tk3.24 crore was paid for another 673 dressing tables.

On average, each dressing table cost Tk55,379.

However, the CAG audit team purchased similar dressing tables and found that the market price of each table, including transport cost, overhead and profit, was Tk30,503. On that basis, the total cost of 1,342 dressing tables should have been Tk4.09 crore.

The report said that under the Public Procurement Rules, 2008, even if tender prices were not quoted in a balanced manner, the tender evaluation committee could have instructed the bidders to provide a complete breakdown of the tender prices.

Instead, the tender evaluation committee, without following the rules, evaluated unit prices quoted at three to 16 times higher rates and recommended awarding the work orders to the contractors concerned.