Substandard hardware sold to DISCOs behind extraordinary line losses: CCP

ISLAMABAD: The Competition Commission of Pakistan (CCP)’s inquiry committee has alleged “embezzlement of billions of rupees” in the supply of line hardware material to power distribution companies (DISCOs), recommending necessary proceedings against contractors and manufacturers.

[private] Acting upon the directions of Prime Minister Imran Khan, the CCP has unearthed a scandal of power distributing companies (DISCOs) and issued show-cause notices to 46 companies in this regard after obtaining documentary evidence of alleged cartelisation.

The inquiry committee alleged that the said 46 companies were found supplying poor quality/substandard hardware material to all government-owned DISCOs. Owing to the poor line material, power sector losses increased manifold, causing billions of rupees worth annual losses to the national exchequer, it added.

According to the CCP, “After finding documentary evidence regarding the issued tenders of Hyderabad Electric Supply Company (HESCO), Multan Electric Supply Company (MEPCO) and Tribal Area Electric Supply Company (TESCO), the CCP had initiated an inquiry under Section 37(2) of the Competition Act, 2010, and also under 58 regulation of CCP regulations, against the alleged collusive bidding by the suppliers of electric transmission line hardware.”

Subsequently, an inquiry committee was constituted by CCP to probe the matter and three high officials were assigned the task of conducting the inquiry. The inquiry committee on January 24, 2018, wrote letters to Gujranwala Electric Power Company (GEPCO), Lahore Electric Supply Company (LESCO), Islamabad Electric Supply Company (IESCO), Faisalabad Electric Supply Company (FESCO), MEPCO, Peshawar Electric Supply Company (PESCO), and Quetta Electric Supply Company (QESCO), seeking details of biddings conducted during last three years. 

After receiving the bidding documents from DISCOs, the inquiry committee noted discrepancies in the bidding process, with favours being given to particular companies. 

Furthermore, it was unearthed that suppliers had established a cartel, pointing out the formulation of strict SOPs by the suppliers of line hardware material to divide the tenders. 

The inquiry report, submitted recently to the CCP, also highlighted several other measures that hindered market competition.

“In view thereof, the inquiry committee recommends that the CCP consider initiating proceedings under Section 30 of the Act against the contractors and manufacturers who were involved in this coordinated embezzlement,” the inquiry report stated.  [/private]