2.5 million MRP booklets contract going to French firm without bids

Published On: February 23, 2020 08:15 AM NPT By: Sunil Sapkota

Yeti Holdings is local agent 

KATHMANDU, Feb 23: The government has initiated a G2G (government to government) deal with a French company for the purchase of machine-readable passport (MRP) booklets, according to multiple sources. 

The Department of Passports (DoP) at the Ministry of Foreign Affairs (MoFA) forwarded a proposal to the cabinet last week to procure 2.5 million MRP booklets, a highly placed source at the ministry told Republica. The 2.5 million booklets proposal clearly mentions a G2G deal involving a government-owned company in Europe, the sources said. 

The DoP in November cancelled a global tender for E-passports at the eleventh hour, reportedly on a direct order from Prime Minister K P Oli. Although the tender was said to be cancelled by the cabinet, no formal cancellation decision has been taken.  

DoP Director General Ram Kaji Khadka informed that the department has only 550,000 MRP booklets in stock. “There is an immediate need to address this situation and we hope a solution will be worked out by Sunday,” he said. 

Khadka, however, declined to comment on the proposal that the DoP forwarded to the cabinet for approval last week.

With the cancellation of the global tender for E-passport procurement, the government is seeking to sign a deal with the France-based IN Groupe on the pretext of a scarcity of passport booklets, sources at MoFA said.  Yeti Holdings is the local agent of the French company. 

Although the proposal mentions inviting quotations from Veridos, a German company, as well as  In Groupe, the intention is to select the French company, sources said. “Homework is being done to ensure that the deal is signed with In Groupe,” they said. “The executive director of the Security Printing Center (SRP) , Bikal Poudel, has been entrusted with facilitating the process.”

Lorien Pyakulinsag, the German agent for Veridos,  had worked with Poudel on an earlier MRP deal, for which another French company, Oberthur Technologies, was selected. 

Rs 15 million additional payment
It is learnt that an additional payment of Rs 15 million was incurred while procuring the MRPs under the earlier deal. The supplier company Oberthur was paid an additional Rs 15 million as against the initial clauses of the agreement.

As per the agreement with the supplier company, 600,000 of a total of 3 million booklets were to be provided at one rate, while payment for the remaining 2.4 million booklets was supposed to be at an increased rate through a price variation mechanism. However, it is found that only 500,000  booklets were provided as per the lower rate, with the remaining 100,000 out of the 600,000 being at the increased rate. This left the state coffers forking out an additional  Rs 15 million.

The DoP had signed a five-year deal with Oberthur Technologies in August 2010 for printing 4 million MRP booklets at a unit cost of USD 3.59. The same company was also chosen for supplying 2.5 million booklets without any competitive bidding and at an increased unit cost. The per-booklet cost was increased to USD 5.14 from USD 3.59.

Of the three million MRP booklets to be supplied after the variation, 2.4 million booklets were to be provided at the increased rate (USD 5.14 per booklet) and 600,000 at the lower rate of 3.59 US$. But only 500,000 of the total 600,000 MRP booklets were provided at the lower rate and 100,000 were paid for at the increased rate. 

With an additional cost of US$ 1.55 for each booklet, an additional payment of Rs 15 million was incurred. 

The then director-general of DoP Lok Bahadur Thapa, Deputy Executive Director of National Information Technology Center Bikal Poudel, Finance Officer Anu Aryal Khanal and local agent of Oberthur Technologies Siddhartha Pandey worked out the additional payment, the source at the ministry said. The Office of the Auditor General has flagged the case in its annual report.

Poudel has also worked as Information Technology advisor to then CIAA chief Lok Man Singh Karki. MoFA officials point out the need for a CIAA investigation into the issue. Thapa is currently serving as ambassador to Belgium. 

It is also learnt that the DoP has made an amendment to the MRP contract in breach of public procurement practices. An amendment effected on December 1, 2013 has added a new provision for ultra-thin holographic lamination in the observation page, departing from the earlier data page with a machine-readable zone (MRZ).  Also, inkjet printing, which requires thermal printing, was used after making a change to the original contract.

Former chief of the Office of the Auditor General (OAG) Suk Dev Khatri has termed such changes illegal. “It is illegal to make changes to the initial contract in order to benefit a contractor,” he said.

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