Public procurement paradox

FE Team | Published: November 14, 2007 00:00:00 | Updated: February 01, 2018 00:00:00

Shamsul Huq Zahid
The Public Procurement Act (PPA)- 2006 adopted at the insistence of the multilateral donors, particularly the World Bank (WB), has emerged as a major irritant to the policymakers as far as implementation of development projects are concerned.
The cost exacted on the government exchequer by the Act, designed primarily to eliminate corruption in public procurement of goods and services, in some cases, outweighs the benefit. The procedural delays involved in the compliance of the provisions of the PPA are held responsible for the hike in project costs.
The immediate past BNP-led alliance government dragged its feet on the adoption of the PPA in the face of stiff resistance from most members of the cabinet while former Finance Minister Saifur Rahman was its staunchest supporter. The ministers opposing the PPA had claimed that the government procurement would be costlier and more time consuming under the Act. Many smelt rat in such a claim at that time.
But there appears to be some truth in the claim made by the ministers of the alliance government as none other than Tapan Chowdhury, the energy adviser of the interim administration that has launched crusade against corruption, expressed his deep indignation over the PPA.
The reason for his resentment against the Act is nothing but the delay being caused in the implementation of some important projects in the power and energy sector. For instance, the energy ministry announced earlier that it would launch a bidding round for hydrocarbon exploration in the Bay of Bengal by December next. But this is unlikely to happen because of the procedural delays. Similarly, the implementation of a number of independent power projects (IPPs), reportedly, is being delayed because of procedural complexities ingrained in the PPA.
What is more interesting is that the Asian Development Bank, a multilateral lender, recently sought waiver of certain provisions of the PPA to facilitate appointment of its chosen consulting firm that would prepare the detailed design of the Padma Multipurpose Bridge. The Bank made such waiver conditional to the availability of a loan amounting to US$ 17.6 million meant for the preparation of the design. The government has accepted the condition and completed negotiations with the Bank early this month in Manila.
In the original Public Procurement Regulations (PPR), 2003 that now forms a part of the PPA-2006, procurement of goods and services by the government through open bidding was made mandatory. However, nothing was said in case of donor-funded projects.
Knowledgeable circles alleged that the donor agencies recently got a provision added to the PPR to the effect that the government, if it desired so, would be free to grant waiver to donors and allow them to procure goods and services according to their own choice. The ADB took advantage of that waiver facility.
But one cannot be blamed if one raises questions about the new provision in the PPR allowing the donors to procure goods and services without open bidding. Is it fair on the part of the donors to skip the procedures that have been made mandatory in case of procurement by the government?
Stories are galore in the government circle about the technical assistance (TA) given by the bilateral as well as multilateral donors. Studies have revealed that a big chunk of such assistance is ploughed back to the countries of origin. And there are also questions about the quality and competence of the foreign consultants appointed by the bilateral and multilateral donors under TA and financial benefits granted to them.
There is no denying that corruption has been endemic in government procurement of goods and services, estimated to be around $4.0 to $5.0 billion a year. Nearly 25 to 30 per cent of funds meant for procurement of goods and services, according to an unofficial estimate, are either wasted or misappropriated.
A section of government officials in connivance with private suppliers and contractors until recently embezzled procurement funds bypassing open bidding process. The PPA has tried to reduce the level of misappropriation of public fund as far as practicable. No assessment on the actual impact of the Act has yet been done. Moreover, e-governance which is viewed as an important element in ensuring transparency and accountability in the procurement of goods and services in the public sector has not received the much-needed attention from the authorities concerned.
Under the present caretaker administration, irregularities in official procurement, for obvious reasons, may have declined. But there is no guarantee that the situation would not take a reverse turn with the installation of a political government.
It would be prudent on the part of the government and the multilateral donors, who were instrumental to the introduction of the PPA, to examine the problems that have cropped up in the implementation of the PPA and find remedial measures. Otherwise, the very purpose of the PPA would be defeated.