Transparency International Pakistan (TIP) has raised serious concerns about potential irregularities in the procurement process for the $153 million 215MW Madyan Hydropower Project in Khyber Pakhtunkhwa, urging the World Bank to investigate the issue.
According to a report by The News, in a letter addressed to Ms. Bolormaa Amgaabazar, the World Bank’s Country Director for Pakistan, TIP detailed a formal complaint received regarding “significant violations” in the prequalification and evaluation procedures executed by the Khyber Pakhtunkhwa Energy Development Organization (PEDO).
These processes were carried out under the World Bank-funded Khyber Pakhtunkhwa Hydropower Renewable Energy Development (KHRE) Project.
TIP highlighted that a joint venture (JV) was prequalified despite questionable eligibility. One of the entities involved, holding 90% of the JV’s share, allegedly misrepresented its corporate status by presenting itself as a private company when, in reality, it is a state-owned entity. Under World Bank procurement rules, this would only be permissible under specific conditions, including financial autonomy, which TIP claims the entity lacks.
The watchdog also pointed out significant financial concerns, noting that the company in question had reported negative cash flows for four consecutive years (2019-2022). With total revenues of just $16.6 million in 2023, TIP expressed skepticism over the company’s ability to bid for a multi-million dollar hydropower project. Despite these financial challenges, the company reportedly declared a profit of $57.2 million before tax in 2023, raising questions about the transparency of its finances.
Additionally, TIP raised concerns over the company’s attempt to meet mandatory financial requirements by submitting a support letter from a brokerage firm, rather than a recognized bank or financial institution, offering only a conditional $15 million facility.
TIP has called on the World Bank, the Khyber Pakhtunkhwa government, and other relevant oversight bodies, including the Prime Minister’s Office and the Peshawar High Court registrar, to investigate the matter thoroughly and ensure compliance with procurement rules.
