- Amount borrowed from WB exceeds actual cost of solar kits.
- Solar DC fans distributed by altering import documents.
- Sindh minister says relevant documents will be provided.
Serious questions have arisen regarding alleged irregularities and transparency in contracts related to the Pakistan Peoples Party’s flagship project, the Sindh Solar Energy Project (SSEP), The News reported on Sunday.
The first phase of this project, funded by the World Bank with Rs28 billion, aimed to distribute 200,000 solar home systems. A foreign company reported the cost of each solar kit as $151, but import documents revealed that the actual price was less than $50.
The foreign company was also supposed to import solar DC fans. However, instead of these, fans manufactured in Pakistan were distributed by altering import documents, and duties and taxes were claimed based on allegedly fake import documents.
Geo News‘ programme “Naya Pakistan” anchorperson Shahzad Iqbal and executive producer Syed Hassam Ahmed Warsi brought important facts related to the alleged irregularities in the SSEP to light for the first time.
Reacting to this investigative report during the show, provincial minister Syed Nasir Hussain Shah claimed that there are no irregularities in the SSEP, and that the relevant documents would be provided.
When asked whether the low price of the solar unit recorded in the commercial invoice given to Customs by the company constitutes under-invoicing, Shah responded that if under-invoicing occurred, it was done by the private company.
Regarding the import of fans, he said if fake documents were created to show incorrect imports, the Sindh government would conduct an inquiry and bring the matter to light.
The SSEP was announced by PPP Chairman Bilawal Bhutto Zardari during his election campaign, promising to provide 300 units of free electricity if he was elected prime minister.
The Sindh government has started distributing solar home systems to thousands of deserving households in Karachi and 30 districts of the province over the past year.
In the first phase of the Sindh government’s project, it is claimed that loans from the WB provided solar systems to approximately 200,000 homes. However, significant questions and objections regarding transparency and delays in this Rs28 billion project have been raised.
Following the questions raised in the Senate۔s standing committee chaired by Senator Saifullah Abro, an investigation into this matter began, and further issues of alleged irregularities amounting to billions of rupees, lack of transparency in contracts and alterations in documentary records emerged.
The Sindh government had announced last July that it would provide solar home systems to low-income off-grid households or those using less than 100 units of electricity. The target was set to provide solar systems to 200,000 households within a month.
The provincial government considers the SSEP its flagship initiative. Under this programme, solar home systems are being provided to households included in the Benazir Income Support Programme (BISP), which includes one solar panel, a battery, a DC fan, three LED bulbs and a facility for charging mobile phones.
The authorities estimated the total cost of a complete solar home unit to be approximately $208, or about Rs55,000. The Sindh government has received funding of $100 million, or approximately Rs28 billion, from the WB for this project, and claims that the project is being monitored by the WB itself.
However, questions and objections regarding the project continue to arise. This May, during a meeting of the Senate’s Standing Committee on Economic Affairs, chaired by Senator Abro, questions were raised about the lack of transparency in the distribution of solar systems and delays in the implementation of the project.
On June 23, the Sindh Energy Department wrote to project director Mahfooz Ahmed Qazi, instructing seven officers of the SSEP to appear before the inquiry committee, but no results from this inquiry have been made public yet.
“Naya Pakistan” also contacted Qazi to know his stance, but he refrained from making any on-record comments or providing his position due to his government job.
While questions were raised in the Senate committee regarding delays in the implementation of the project, the role of NGOs and the distribution under the BISP, the issue is not solely about delays in the project or a lack of transparency in the distribution of solar systems.
According to the revelations and documents presented during “Naya Pakistan”, the matter appears to be much more serious. The Sindh government claims that under Phase 1 of this project, 200,000 solar home systems would be distributed to the public, with a unit price of $151.31.
If $56.3 in taxes are included, this amounts to approximately $208, or Rs55,000, per unit. A loan has been taken from the WB for this project, which will ultimately be repaid from the public’s pockets.
Documentary evidence available with “Naya Pakistan” indicates that the actual price of the solar systems being provided by the Sindh government is allegedly much lower than $151, suggesting that the amount borrowed from the WB exceeds the actual cost of the solar kits.
According to the documents obtained by “Naya Pakistan”, a private company quoted the Sindh government a price of $112.44 per unit for the solar home system in the quotation document.
Including taxes and duties, this amounts to $151.79, which includes a controller, battery, LED light, LED cable, PV cable, mounting structure and a USB cable for mobile charging.
However, the commercial invoice from the same company, which is available with “Naya Pakistan”, shows that the quoted price for this solar home system is much lower than $112.
This document indicates that on October 24, 2024, the company imported 20,808 solar home system kits, and their price was not $112 but only $23.4 per unit, which is approximately five times lower than the original price.
According to the bill of entry document from the same private company, the foreign company exported 20,808 kits to a local company in Pakistan at a rate of $23.4 per unit.
Therefore, the question arises as to why is there such a significant difference between the actual price of a solar kit imported from China and the estimated price? In this regard, “Naya Pakistan” attempted to contact the foreign company to know its position, but despite repeated attempts, the foreign company did not provide a response.
The Sindh government also claimed to provide an imported solar DC fan with this solar kit. However, the documents available with “Naya Pakistan” indicate that the fans being distributed to the public were not imported but rather purchased in Pakistan.
It is alleged that fake documents were created to show the import of these fans, through which the Sindh government later claimed fraudulent duties and taxes.
The documents presented in the programme reveal that the import of solar DC fans is mentioned in column No 42 of the Customs’ bill of entry document. According to this document, the foreign company exported 25,300 fans to its Pakistani agent at a rate of $23.5 per unit.
Interestingly, according to the company’s own website, the fans being distributed are manufactured in Pakistan and exported from Pakistan to foreign countries. This raises the question of how an import document exists when these fans are produced in Pakistan and were not imported from China.
According to our sources, the reason for this discrepancy is that the document is fake, as there are two bills of entry for the same machine number.
The machine number for the imported fans is recorded as KPPI-HC-32166. However, there is another bill of entry for the same machine number, which lists the import of lithium batteries. Allegedly, this was all done to claim Customs duties and taxes from the government, based on the fraudulent import documents for the DC fans.
Additionally, a document from the Customs’ clearing agency was brought to light in the programme, which mentions the claim for Customs duty and excise for the import of solar DC fans, even though these solar DC fans were never imported.
Based on this document, the company claimed Customs duties and taxes. Allegedly, according to the fake bill of entry, claims were made for approximately Rs127 million based on $18 in duties and taxes for 25,300 fans.
Furthermore, the Sindh government entered into a contract with the foreign company for $151 per unit without duties and taxes, according to the company’s bid. Based on this contract, a loan was taken from the WB.
However, according to the documents, the company that won the contract exported the solar home systems at only $23.4 per unit. Similarly, the import of the fans was shown at $23.5.
This means that the total value of the entire solar kit was less than $50, yet the Sindh government contracted with the foreign company at a cost of $151, which implies that the total cost for 200,000 solar kits without duties and taxes was approximately Rs8.5 billion.
If we also include the nearly Rs1 billion given to NGOs for the distribution of solar home systems, the total cost of the project without duties and taxes amounts to Rs9.5 billion.
Therefore, the question now arises: why is there such a significant difference between the price the Sindh government is stating and the $100 per unit difference in the import documents?
Based on this difference, under Phase 1, a $100 difference for 200,000 solar units amounts to Rs5.6 billion. Similarly, if fake duties are claimed for 200,000 fans, it amounts to over Rs1 billion.
In total, a discrepancy of Rs6.5 billion is emerging in the project. This raises the question of why there is such a large difference between the estimated cost of the project and the actual price.
In the second phase of this project, even more irregularities and issues regarding a lack of transparency in the contract are coming to light.
In this regard, Transparency International Pakistan (TIP) has written another letter to Sindh Chief Minister Syed Murad Ali Shah, highlighting serious violations of the Sindh Public Procurement Rules in awarding the SSEP contract, as well as complaints regarding the purchase of solar units at inflated prices.
The letter states that complaints received by TIP allege that the Sindh cabinet approved a contract directly with a subsidiary of a government company, which constitutes a violation of the Sindh Public Procurement Rules.
However, after the contract was awarded, the government company unilaterally changed the agreement to include another subsidiary company, despite the contract stipulating that it could not be transferred in whole or in part to anyone else.
According to the letter, it has also been revealed that the price of one purchased unit was inflated to $135, while its market price is $84 per unit. This additional cost has resulted in a loss of approximately $21 million or Rs6 billion. The letter recommends that the CM investigate the matter.
