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CCP study finds discrimination against local firms in CPEC projects
KARACHI: The Competition Commission of Pakistan (CCP) urged the National Highway Authority (NHA), Pakistan Engineering Council (PEC), and Public Procurement Regulatory Authority (PPRA) to ensure competitive procurement by all the participants in the CPEC related construction work. The CCP has conducted a detailed study to assess competition issues in the road construction sector in Pakistan, […]
KARACHI: The Competition Commission of Pakistan (CCP) urged the National Highway Authority (NHA), Pakistan Engineering Council (PEC), and Public Procurement Regulatory Authority (PPRA) to ensure competitive procurement by all the participants in the CPEC related construction work.
The CCP has conducted a detailed study to assess competition issues in the road construction sector in Pakistan, especially in the wake of the China Pakistan Economic Corridor (CPEC), in which it has proposed remedies to foster competition and create a level playing field in the sector.
The CCP said there should be no preferential treatment given by the government in awarding road contracts to any foreign constructor including the Chinese firms who have not performed well in the previous projects.
The CCP observed that under CPEC the Chinese firms in road construction are receiving various exemptions, such as import duties and income tax exemptions consequently lowering their cost of doing business. The local constructors do not receive any such exemptions and therefore, this leads to discrimination between the local and the foreign Chinese construction firms. To maintain a level playing field, the local constructors should be given relief on import duties and taxation as well in order to enable them to compete in road projects.
In Khyber Pakhtunkhwa (KP) foreign and domestic (SOEs) constructors can receive road construction projects without the process of competitive bidding. “The KP provincial government must look into this amendment and ensure transparent competition in the construction sector”, CCP study recommends.
The CCP recommend all authorities to break down CPEC projects into optimum size packages in order to ensure greater participation of local contractors as well.
The NHA should monitor Joint Ventures in road construction projects closely as under the PEC Constructors/Operators Bye Laws, the local constructors to qualify for certain construction projects, can enter into Joint Ventures.
“There should be no preferential treatment given by the government in awarding road contracts to any foreign constructor”, CCP recommends.
There should be a proper mechanism to check subcontracting by the implementing agency to promote enhanced competition in the sector, improve the quality of projects as per the specifications given in the tender documents, and to bring transparency in subcontracting, CCP noted.
“In order to create a level playing field in the road construction sector there should be no discrimination between public and private firms and equal opportunity must be provided to all players. It is therefore recommended that either these exemptions to state-owned enterprises (SOE’s) maybe annulled”.
The CCP found that consultants in the road projects are given unrealistic timelines for the road project design, supervision, and completion. This not only adversely affects the quality of the project, but also affects the smaller consultants, who are otherwise capable, being impracticable to meet the timelines. Consequently, the consultancy market is foreclosed for smaller players. Sufficient time, in accordance with the complexity of the project, must be given to the consultants for project design, supervision, and completion.
