DPDC bypasses open bidding to procure 450 transformers

The largest power-distributing company of the country has decided to purchase 450 transformers of 200-KVA capacity from Bangladesh Machine Tools Factory (BMTF) bypassing the bidding process, officials said.
The Dhaka Power Distribution Company Limited (DPDC) decided in its 168th meeting to purchase the transformers at a cost of Tk 8.46 billion (846 crore) under a direct purchase method (DPM).
The DPDC is making the purchase with funds from its revenue budget following a request from the BMTF management to procure 450 transformers out of 500 as part of a procurement process decided in 2012.
The power company in 2012 decided to purchase 500 transformers under the DPM and signed an agreement with the BMTF on supply of 50 transformers involving Tk 22.1 million on June 06, 2012 on an experimental basis.
The BMTF supplied the 50 transformers on July 05 in the year at a cost of Tk 0.442 million (4.42 lakh) each.
The DPDC last purchased 200 KVA transformers under an open tender method (OTM) at a cost of Tk 0.415 million (4.15 lakh) each.
The 168th meeting of the DPDC, however, decided to request the BMTF to lower the price of the transformers as it is much higher than that quoted for the earlier purchase under the OTM. The board meeting also mentioned that all the 50 transformers were running well.
Admitting the decision on purchase, DPDC Managing Director Brig Gen (Retd) Nazrul Hasan told the FE that they were going to purchase the transformers from the BMTF by following the direct purchase method but the price was not yet finalised.
The BMTF manufactures transformers, he said.
While asked whether the direct procurement was going against the government's existing rules, Mr Hasan said the DPM is also allowed under the procurement rules.         
Relevant sources said no company in Bangladesh manufactures transformers but various parts are imported from China, Korea, Germany or Poland and then assembled in the country.
When asked for his comment on this type of procurement, Transparency International Bangladesh (TIB) Executive Director (ED) Iftekharuzzaman said an OTM is a must wherever public fund is involved. If it is a single source in the country which supplies transformers, then the DPM could be followed, he said. But in this case the BMTF is not a single source, he added.
He further said as the DPDC itself acknowledged that the price of transformers was lower for the purchase under the OTM, two things are happening in this case: it is not following the lower price and, on the other hand, it is fixing the price arbitrarily which is illogical.
"The arbitrary purchase decision is illogical, in violation of relevant procurement rules of the government and waste of public fund. When the buyer is a government sector, the purchase process must be competitive", said the TIB ED.
Central Procurement Technical Unit (CPTU) Director General Faruk Hossain said the procurement act requires that any government purchase be competitive and the other provisions are exceptions.  
He said the government could follow the DPM only in certain circumstances like emergency, public interest, disaster and crisis management and on approval of the cabinet committee on economic affairs (CCEA).
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