Wide-body bought without tender call: Regulator

December 11, 2018 07:45 AM Republica


Estimated cost based on price of 8 years ago

KATHMANDU, Dec 11: The Public Procurement Monitoring Office (PPMO) has found that the purchase of two wide-body aircraft by Nepal Airlines Corporation (NAC) was made without any tender calls, and there was no open competition. This was a massive breach of procurement law. 

The procurement regulator, which submitted its report on Monday, said that NAC decided the deal worth billions of rupees only on the basis of a request for proposals (RFP). This, according to PPMO, is in no way a tender call, which is a must for the purchase of goods and services under the Public Procurement Act. 

PPMO has said that the purchase of aircraft is like the procurement of any other item and purchasing them without tender calls means it was clear there was no competition. PPMO had formed a committee to investigate the matter after the Public Accounts Committee (PAC) of parliament requested its opinion on the controversial procurement. NAC officials could not satisfy PAC, which subjected them to repeated grilling. PAC officials had visited the NAC head office at New Road and had examined all the papers pertaining to the wide-body procurement, sources at PPMO said. 

The PPMO report submitted to PAC said the RFP document, on the basis of which the purchase decision was made, did not set out any conditions and lacked any technical specifications, according to sources including one source at PAC.

The initial decision of the NAC board was to purchase brand new aircraft but the NAC management later tweaked the criteria to settle for aircraft that had clocked 1,000 flight hours, sources said quoting the PPMO report. 

The other serious flaw PPMO found was that NAC calculated the estimated price based on the price quoted by the Airbus company, the manufacturer of the aircraft, eight years ago. 

“NAC has calculated the price based on annual cost increments since eight years ago when NAC had invited tender bids for narrow-body planes,” said a source at PAC.

The report shows that the estimated cost was inflated and NAC accepted the sale proposal made by the American supplier AAR Corp as it was. There were no qualifications and technical criteria to evaluate competition among RFP participants. 

PPMO’s report disclosed that NAC did not even collect the current prices of the aircraft from the manufacturers. 

After receiving the report, PAC has called a meeting for Wednesday. PAC officials say that the committee is likely to confirm its assumption of corruption and may form a subcommittee to make another report. 

PAC has alleged the embezzlement of Rs 6 billion in the wide-body aircraft purchase.


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