LAHORE/PESHAWAR: Transparency International (TI) Pakistan has requested that the World Bank conduct an investigation into allegations of significant procurement irregularities related to the award of the electro-mechanical contract for the 88MW Gabral Kalam Hydropower Project in Swat, Khyber Pakhtunkhwa. In a formal communication to World Bank Country Director Ms. Bolormaa Amgaabazar, TI Pakistan disclosed that the prequalification process executed by the Pakhtunkhwa Energy Development Organization (PEDO) contravened international procurement standards and concealed substantial financial and legal disqualifying factors.
The project is funded through the World Bank's Khyber Pakhtunkhwa Hydropower Renewable Energy Development (KHRE) initiative, with the prequalified joint venture IMPSA-BITC JV at the center of the controversy. According to tender documentation, the partnership submitted its proposal on May 17, 2024, declaring it was not a state-owned entity.
However, official records indicate that IMPSA, an Argentine corporation, was nationalized in June 2021 following financial hardship and liabilities exceeding $500 million. The Argentine federal government holds a 63.7 percent stake, while the province of Mendoza holds 21.2 percent, placing 84.9 percent of the enterprise under government control throughout 2024.
World Bank regulations require state-owned entities to demonstrate legal and financial independence to qualify for bidding - a standard IMPSA allegedly failed to meet. Additionally, TI Pakistan identified deficiencies in meeting financial thresholds.
Tender specifications require participants to demonstrate an average annual revenue of at least $25 million over the preceding five years and access to a $6 million working capital credit facility. The IMPSA-BITC JV provided a reference letter from Banco Patagonia; however, independent verification in September 2024 revealed the letter was conditional and did not guarantee a line of credit.
TIP has called upon the World Bank to review the bid assessment process and restart the qualification phase if violations are substantiated. The organization has shared documentation with the Prime Minister's Office, the KP Chief Minister, and the Parliamentary Committee on Economic Affairs.
Conversely, PEDO CEO Anwar-ul-Haq told Daily Jang that the allegations regarding IMPSA's status as a state-owned enterprise (SOE) are misplaced. He clarified that the criteria for SOEs under ITB 4.6 of the bidding documents apply only to entities within the borrower's country.
He maintained that under ITB 4.1, bidders may be private or state-owned, provided they comply with applicable regulations. The ongoing scrutiny highlights the increasing demand for transparency and accountability in federally and provincially managed development projects financed through international lending institutions across Pakistan.