PESHAWAR: The dispute between the Khyber Pakhtunkhwa government and the World Bank regarding the Gabral Kalam hydropower project has escalated. The PTI government has decided to cancel the bidding process for the 88 MW project and initiate re-bidding. In response, the World Bank has warned that ignoring the lowest bidder could result in misprocurement, leading to the potential cancellation of a $450 million loan.
The World Bank has also indicated it may downgrade the project rating from moderately satisfactory to moderately unsatisfactory.
Additional Chief Secretary Imtiaz Hussain Shah explained that the contract process was completed by PEDO and approved by the World Bank, with the bank addressing the second-lowest bidder’s concerns. “The bank has already issued a no objection letter to award the contract, and now the newly established executive committee will approve the project, and PEDO will issue a letter of award to the lowest bidder,” he stated.
At a policy board meeting of PEDO on May 1, 2024, chaired by the chief minister, it was revealed that the lowest bidder (GKHP P, a consortium) did not meet the eligibility criteria, particularly regarding construction experience and project cost discrepancies. The board recommended cancelling the current bidding process and initiating a fresh one, with input from the World Bank. However, the World Bank disagreed with this decision.
World Bank Operation Manager Gailus J. Draugelis sent a letter to the provincial government on May 23, 2024, expressing the bank’s concerns. The letter highlighted that the project, now in its fourth year, has not met key performance indicators, with a disbursement rate of less than two percent. Due to these delays, the project’s implementation performance is being downgraded, and further delays could significantly increase costs.
An email from the World Bank team leader of the project stated that if the contract cannot be awarded after the second round of bidding, the project cannot be implemented, potentially leading to the cancellation of the entire loan. This situation casts doubts on the capacity of PEDO and the KP government to implement large-scale projects financed by international organizations.
An anonymous official highlighted that misprocurement at this level raises serious concerns about the KP government’s ability to complete World Bank-funded projects. The official also questioned the KP government’s ability to avoid penalties and substantial commitment fees already costing millions of rupees due to delays.
Story by Arshad Aziz Malik
