TI Pakistan advises PIA to procure 20 narrow-body aircraft on dry lease

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Transparency International Pakistan has advised Pakistan International Airlines (PIA) to immediately procure 20 narrow body aircraft from Shahid Khaqan Abbassi MNA, who has offered brand new aircraft on lease at half the price for five Airbus 320 being leased by PIA at $36.8 million, with financing from Bank of China. In a letter sent by TI-Pakistan Adviser Syed Adil Gilani on February 20 to Captain Muhammad Junaid Younus, Acting Managing Director PIA, he referred to the meeting of the Special Committee of the National Assembly on February 19, where MNA Shahid Khaqan Abbassi offered brand new aircraft on lease at half the price for five Airbus 320 being leased by PIA at $36.8 million, with financing from Bank of China.

HE QUOTED FOLLOWING DETAILS AS HAVE BEEN REPORTED:

a) The committee was informed that PIA would be getting five Airbus 320 at $36.8 million, with financing from Bank of China.

b) The committee noted that the five planes which PIA intends to get on dry lease were costly than open market rates.

c) Shahid Khaqan Abbassi even offered brand new aircraft at lease to PIA at half the price in response to a presentation made by PIA CFO Aftab Ahmed regarding business plan for revival of PIA.

d) Aftab explained that they had to abide by the PPRA rules and they were not in a position to negotiate.

Adil Gilani said if the above report was correct, " Transparency International Pakistan would like to suggest PIA to request MNA Shahid Khaqan Abbassi to provide four sets of five Airbus 320 new aircraft as reportedly offered by him in the Committee meeting, for six years dry lease immediately, at half the tendered price of $36.8 million.

Public Procurement Rules 2004 allows negotiated tendering under Rule No 42 (d) in certain cases.

RULE 42: ALTERNATIVE METHODS OF PROCUREMENTS:

A procuring agency may utilise the following alternative methods of procurement of goods, services and works, namely:-

(d) Negotiated tendering: A procuring agency may engage in negotiated tendering with one or more suppliers or contractors with or without prior publication of a procurement notification. This procedure shall only be used when,-

(iii) For reasons of extreme urgency brought about by events unforeseeable by the procuring agency, the time limits laid down for open and limited bidding methods cannot be met. The circumstances invoked to justify extreme urgency must not be attributable to the procuring agency:

Provided that any procuring agency desirous of using negotiated tendering as a method of procurement shall record its reasons and justifications in writing for resorting to negotiated tendering and shall place the same on record.

PIA has processed procurement of narrow body aircrafts in accordance with requirement of Public Procurement Rules 2004 from October 2012 to February 2013. As the lowest evaluated responsive bidder has offered five Airbus 320 being leased by PIA at $36.8 million, which as stated by MNA Shahid Khaqan Abbassi as double than the market prices, PIA may use Rule No 42 (d) (iii), for accepting the offer of MNA Shahid Khaqan Abbassi of providing four sets of five Airbus 320 or equivalent new aircraft on six-year dry lease immediately, at half the lowest tendered price of $36.8 million. The reason of extreme urgency is due to failure of bidders to offer narrow body aircrafts at economical cost, which is causing loss to PIA of billions of rupees in loss of traffic. PIA shall record the reason of using negotiated tendering under Rule No 42 (d), and justifications for resorting to negotiated tendering, as stated in paragraph five above in writing and shall place the same on record.

TI-Pakistan was striving for across the board application of Rule of Law, which was the only way to stop corruption, he said. Copies of the letter have been forwarded for the information with the request to take action under the authority vested in their respective jurisdictions: Chairman, Public Accounts Committee, Islamabad; Registrar, Supreme Court of Pakistan, Islamabad; Chairman, NAB, Islamabad; Chairman, PIA, Islamabad; Auditor General, Islamabad; and Managing Director, PPRA, Islamabad.

Courtesy: Business Recorder


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