‘56, 2nd Floor, Knayaban-e-ttehed, Phase VI, TRANSPARENCY Defence Housing Autheiy, Karachi INTERNATIONAL-PAKISTAN Tok (92-71)-35100208, 38400409, Fax: 25360410 pakisten@grailcom enw anspar HGP 31° May 2011 Mr. Muhammad Shakil Durrani, Chairman, Water & Power Development Authority, 701, WAPDA House, Lahore. Sub: Complaint on Tender of Procurement of Fuel Additive for Thermal Power Plant, Muzzafargh, Tender No CEO/MZG/RE-4/T-02- TIP letter dated 18" May 2011 and PEPCO reply dated 23% May 201 Dear Sir, We appreciate the aetion taken by you to rectify the complaint of TI Pakistan about procurement of fuel additive, for the thermal power plant, Jamshoro, Tender No. HAM/T-77 through PEPCO’s letter no. CEO/PCL/PA/709 dated 20" May 2011. However, we would like to point out that the PEPCO’s reply about another complaint on the procurement of magnesium hydro-oxide based fuel additive for thermal power plant Murzafargarh, ICB Tender No. CEO/MZG/RE-4/T-02 sent by the Resident Engineer (O&M) Unit-4 on 23" May 2011 is misleading and not tue, The negation on the para 2 of PEPCO’s clarification sent to MD Public Procurement Regulatory Authority by the complainant M/S Enviro-Chem International on 25" May 2011 is enclosed, which needs to be reviewed by the Chairman and action taken against the officers of PEPCO for giving false statement if the clarification of M/S Enviro-Chem International is correct. ‘The FARA, Fixed Amount Reimbursement Agreement, with USAID or any other donor agency does not allow any one brand to be procured by WAPDA. Secondly USAID funds given to WAPDA are subject to application of Public Procurement Rules 2004, and not USAID Procurement Rules. TI Pakistan requests the Chairman WAPDA to inform PEPCO and all other concerned departments, under WAPDA, using USAID funds to note this important aspect of USAID funds. In para 3, there are two clarifications given by PEPCO regarding specifications, stating that “equivalent” have been mentioned against the items pointed out by TIP in the letter dated 23 April 2011. We are enclosing a copy of the Bill of Quantity where Portea MGS-1, dosing pump of only German make, portable flue gas analyzer of TESTO (German Make), Humidity and Ambient Temperature Meter model 610 of TESTO (German Make), Bacharach Soot Meter of Bacharach Instrument USA and SO3 Spot Tester manufactured by ERC Germany are specified. The above specifications have been notified by PEPCO in all the 06 units, involving hundreds of these items. ANON-PARTISAN, NON-PROFIT COALITION AGAINST CORRUPTION Donations exempted tram tax W'S 2 (56 (2) of, Tax Orcinance 2001© TRANSPARENCY INTERNATIONAL-PAKISTAN Continuction Sheet Noseun As can be seen, the statement of PEPCO about mentioning the term “equivalent” is false and needs (0 be taken seriously by the Chairman WAPDA. As far FARA is concerned, there is no condition to specify one brand. Under IB-28 of the Tender Documents, as well as the Public Procurement Rules 2004, Rule No. 48, PEPCO should have examined the complaint of M/S Enviro-Chem International and completed the inquiry within 15 days. This action has not been followed by PEPCO, which is also a serious violation of Public Procurement Rules 2004 We request the Chairman WAPDA to kindly get this tender scrapped, review the specifications to be broad based as well as not oriented towards one specific manufacturer and re-invite the tenders. Under present circumstances, this tender is deemed to be declared as “mis-procurement” under Rule 50 of Public Procurement Rules 2004. With Regards, -/ Syedl\ifl Gilani Chait Copies forwarded for the information of: 1. Chairman, Public Accounts Committee, Islamabad. Chairman, NAB, Islamabad Registrar, Supreme Court. Auditor General, Islamabad Managing Director, PPRA, Islamabad.SXo ENVIRO-CHEM 22222" Tel 62.21 26241639 INTERNATIONAL Faxsaaa™aseveart Email envirocnem@eytet neta Rot 12/L-042/17 May 25,2011 Managing Director, Public Procurement Regulatory Authority, FBC Building Near State Bank Sector G-5/2, ISLAMABAD. Subd Tender enquiry no:CEO/MZG/RE-4/T-02 for the procurement of fuel oil addi on (magnesium hydroxide) along with supply, installation of necessary dosing, monitoring equipment for unit Nos. 1,2,3,4,6,86 TPS Muzaffarge Dear Sir We acknowledge with thanks receiot of letter no:F.1(24)/00-IVPPRA/2011, dated 25" May, 2011 along with NPGCL letter no CEO/MUZIRE-4/Chom/2468-2602, dated 23.08.2011 in response to bur feller number 36/L-037/17. dated 10” May, 2011 regarding procurement of fuel oil addtive Mg(OH), along with suppiy installation of necessary dosing, monitonng equipment for unit 1 (0 6 TPS, Muzattargarh Our reply to the comments of RE (O&M) Unita, Coordinater FARAVICB, NPGCL, GENCO-lII, Muzeffargarh are as under: 4. We may clanfy that, the local tender number CEOIMZG/RE(F, P&SY/T-457 was called by the CEO, TPS, Muzaffargarh for the procurement of Magnesium based fuel oil addtive not the Magnesium Hydro-Oxde based fuel oll addtive as mentioned by RE Unit-4, in his above referred letter. Further mote, the opening date of the tender no:T-457, was also extended vide letter no CEO/MZG/RE(F,P&S)T-457/1222.26, dated: 05.02.2008 where in it wes mentioned about the requirement of Magnesium based fue! oil additive. It was also clarified that, the Magnesium oxide contents of the additive should be more then 35% to 40% and Magnesium Hydro-Oxice contents 70%. All those companies which participated in the tender 1-487 offered Magnesium based fuel ol additive except M/s. INTAS Intemational Technology and Systems (Pvt) Limited, which offered Magnesium Hydro-Oxide based fuel ol additive {twas clearly mentioned in the tender document that, the Magnesium Oxide contents of fuel oil additive must be 35 % to 40 % and Magnesium Hydro-Oxide contents 70% (copy enclosed) but the purchase order and work order was issued to M/s. INTAS International Technology and Systems (Pvt ) Limited, Karachi on behalf of System Separation, Sweden For the Magnesium Hydro-Oxide based fuel oil additive containing 45% Magnesium Hydro- Oxide instead of 70% Magnesium Hydto-Oxide. all other companies which cffered Magnesium based {vel oi! adaitive containing more than 35 % to 40% Magnesium Oxide and in accordance with the tender requirement were totally ignored, 3. We strongly believe that, the technical and financial evelvation wes not carried out according to the tender requirements and contract was awarded to the bidder, who offered fuel ot additive containing 45% Mg(Ol}), instead of 70% Mg(OH)2. This was clear violation cf terms & conditions of tender and PPR& rules and regulation as well Contd. Page-2=Xo ENVIRO-CHEM 232225" Tet #922)-39231653 INTERNATIONAL Fax 192.21. 35670611 E-mail enwoenem@eyber ret ot <2> 4 Regarding lowest price of fuel oil additive, we may ciarity that the price-of the Magnesium based {uel oil additives 1s always determined on the basis of Magnesium contents only. The fuel oll additive containing 18% Magnesium will always appear to be lower in price per kulogram than, the fue! oil additive containing 35% to 40% Magnesium. But in tem of Mg contents fuel oil additive with 18% Nig will be more expensive as higher doses of the fuel ol additive containing 16% Magnesium will be required as compared to fuel oll additive containing 35% to 40% Magnesium. We therefore, fecl thal, order was issued to the highest bidder which needs to be checked and verified by any independent agency © As far as the trial of any fuel oil additive is concemed, we may mention that, any such trial is, always witnessed by an independent, consultant, highly experienced in fuel oil treatment technology. The data collected during the trial is analyzed and evaluated by comparing with base line data taken before the start of the trial and dunng the trial. Here’in this so called \wial no consultant was engaged to witness the trial and no critical boiler parameters were recorded The trial was witnessed just by the power plant people and declared highly successtul by themselves which 1s against the norms and practices followed in the public sector organizations. ‘We may apprise you of the fact that, the trial with the same fuel oil additive containing 45% Mg(OH}> was carried out by same company at Saba Power Piant, but miserably falled to produce the desired results and was terminated just after few days. The same fuel oil additive was also offered 10 AES Power Plant and Karachi Electric Supply Company (KESC) but the boiler operation engineers refused to make a trial at AES Power Plant and KESC Bin Qasim Thermal Power Plant Considering the fuel ol additive with 45% magnesium hycro oxide unsuitable for the thermal power plants. 5 We are unable to understand that how the trial with the fuel oll additive containing 45% Magnesium Hydro Oxide. became so successful ai TPS, Muzaffargarh when it failed to produce desired results at Saba Power Plant and was refused entry at AES Power Piant and KESC. Being in the {uel oi! treatment business for the last 25 years we know it very well thal {uel oil additive containing 18% Magnesium by weight or 45% Mg(OH). is neither used any where in Pakistan nor even in middle eastern countries, where HFO is fired in the thermal power plant boilers. There are only two thermal power plants in Pekisian, Saba Power Plant & AES Power Plant which are using fue! oil additive containing more than 45% Magnesium Oxide, This can be checked and vented from these two power plants. 7 We strongly bekeve that. the fuel oil additive containing 45% Magnesium Hydroxide was purchased by TPS, Muzaffaigarh against Tender No: CEO/MZG/RE(F.P&S)/T-497,, dated 11" February, 2008 with malafied intension just to favour one perticuler bidder and to out otner bidders at disadvantage Inclusion of specification of Magnesium Hydro-Oxde adcitve in FARA and tencer CEO/MZGIRE-4/T-02 also indicates the same malafied intension as well Cont'd.) .. Page-3Xo ENVIRO-CHEM = 22252" Tel 92.29 26241639 INTERNATIONAL Fex9221-39678011 Email enurocnem@@eybet net 39> & Our humble submission is that, the reasons for the purchase of fuel oil additive from the company which did net offer fuel oil additive according to the tender requirement may be found out and the people responsible for the gross violation of tender terms and conditions and PPRA rules and regulations may kindly be taken to the task so that such violations may not be repeated again ‘ny order to allow fair and wider competition for tender no: CEO/MZGIRE-4/T-02, of TPS, Muzaffargarh. The specification of Magnesium Hydro Oxide fuel oll additive may kindly be excluded from FARA and also from tender no. CEOIMZG/RE-4/T-02.as these have bean included to safeguard the wasted interest of the people who purchased this fuel oll agdtive by wiolating terms and conditions of the tender no:7-457 and PPRA rules and regulations as. well The generic type specification of fuel addlive may also be included in the CEOIMZGIRE-4/T-02; tender documents Your kind consideration and immediate action in this regard will be highly appreciated by us. Yours faithfully CC - Chairman, WAPDA MD, PEPCO. + CFO, PEPCO + Dy Directoril, PPRA - GM (THERMAL) PEPCO CEO, TPS, MUZAFFARGARH R.E (O&M), UNIT 4 CO-ORDINATOR FARA /ICB The Energy Policy Project SECRETARY WATER AND POWER