Dr R Balashankar
DURING 2008-09 SAIL envisaged the installation of pellet plants along-with beneficiation facilities at Gua and Bolani iron ore mines on turnkey basis. This was aimed at utilizing dumped, slimes & fines available at Gua and Bolani ore mines. The beneficiation and pelletisation projects were to be pursued on top priority in keeping with the ambitious expansion programme of SAIL accordingly, SAIL/Raw Materials Division (RMD) issued tender on July 5, 2008.
However, suo motu SAIL rescinded the existing EoI tender and issued split tenders both dated 26-09-2008. Thus once again inviting “EXPRESSION OF INTEREST” from global tenders for installation of beneficiation facilities (1528) to produce beneficiated iron ore fines suitable to produce 4 million tons annually of pellets each at Gua and Bolani iron ore mines.
Eligibility criteria for beneficiation stipulated that the bidder of consortium shall possess the technology for beneficiation of hematite iron ore fines and must have provided technology for at least one beneficiation plants based on hematite iron ore for 3.0 Mt per year or above and the plant should have successfully operated for at least one year.
Eligibility criteria for pelletization stipulated that the bidder/ consortium shall possess the technology for beneficiation of pellet plant and must have executed minimum two pellet plants each of capacity of 3.0 Mt/yr or above based on Hematite iron ore and the plants should have successfully operated for at least one year.
All major global technology providers including—Metso, Bateman, Outotec, FL Smidth, Humboldt Wedag, Downer EDI Mining, MCC’s design institutes from China, Metchem, Hatch, etc.—satisfying the eligibility criteria, indicated their expression of interest (EoI). They gave presentations in MECON for setting up the beneficiation plant and pellet plant on split-package basis.
Based on this response from the EoI exercise SAIL invited tender for installation of 4.0 MPTA capacity Pellet Plant at Gua Ore Mines.
The trustees of the Public Concern for Governance Trust (PCGT), a Mumbai-based NGO brought out last week certain shocking revelations, pointing to major corruption in this bid.
It said (in a better addressed to the SAIL board), that a cartel of Contracting Companies have worked in tandem, with an internal understanding, cheating the Steel Authority of India Ltd., (SAIL), to the tune of over Rs. 750 crore, in the finalisation of the contract.
“This conspiracy comprises of the involvement and connivance of a senior official attached to the Office of the Hon’ble Minister for Steel, Government of India, a senior Director of SAIL, a retired senior official (ex-chairman) from the consulting Company, MECON Limited, a certain middleman who has been notified by the CBI, in the list of UCM (undesirable contact men), and also three Contracting Companies, who were finally shortlisted by SAIL/MECON, for the Gua Mines project of SAIL-RMD”, it said.
The collusion between the Officials of SAIL (Client), MECON (Consultant) and the Contracting Companies (Bidders) is evident, in the deliberate manipulations of the tendering process and its finalisation. Steps were taken to eliminate reputed contenders, who were capable of participating in the tender and also capable of statisfactorily implementing the project. Grossly restricting the competition, to only favoured bidders, who are alleged to be a part of the established cartel the bid was finalised, the NGO alleged.
Eliminating the 4th bidder, who was a reputed consortium of engineering and contracting companies, on some flimsy, technically untenable grounds raised eyebrows. The procedurally irregular steps that were taken to inflate the original estimates and budget of the Gua Project from around Rs. 2,000 crore to above Rs. 2,800 crore, through falsification of figures, immediately after the opening of the price bids on the January 18, 2013, and ensuring that L-1 status of the lowest bidder was sustained within the consultant’s estimate for the Project raised doubt.
The envelope containing the final estimated budget was sealed and delivered to SAIL only on the January 19/20 2013, instead of an earlier date, which is the usual practice, the note said.
The hasty decision of restricting/reducing the competitive bidding to two bidders only at the final bidding stage, in such a high value tender was arbitrary. It further alleged, facilitating an unfair evaluation process based on an understanding between competitors, favorably evaluating the technical proposals of certain bidders, in spite of many serious shortcomings in the documentation related to the respective bid submission exposed the game.
Also the decision favouring recommendations of award of the Contract on the Bidder, who amongst others is known to have paid off huge sums of money to strongly influence all the concerned quarters, including the corridors of power in New Delhi, Office of the Steel Minister, Offices of SAIL/Mecon and certain retired officials of the Government came to light, the NGO alleged.
The NGO which boasts such eminent personalities like JF Rabiero on its board contents, that the competitor worked hand in glove with each other in deciding the price to be quoted, maintaining a safe differential of 18 per cent between the L-1 (Lower bidder) and the H-1 (Higher bidder), with an internal understanding that the third qualified bidder would be abstaining from the final bid.
This kind of conspiracy is unheard of and is a gross violation of CVC Guidelines, especially when all the bidders have duly furnished their consent on the integrity pact (IP), which prohibits them from all such acts of collusion and cheating.
The alleged kingpin who has masterminded this cartelisation in the Gua tender process of SAIL, is the notorious middleman who has been infamously associated with almost all mega deals happening under the Ministry of Steel, Fertilizers and Mines since 2004. He was recently implicated by US Authorities for bribing senior officials of the Indian Government and his Swiss Bank accounts have been frozen on account of alleged corruption. The CBI has identified him in their UCM notified list.
The records show that he was till recent days a Director in one of the shortlisted Companies for the Gua Project.
In the collusion effort that resulted in the cartelisation, he has represented the H-1 Bidder in competition, on the one part.
The alleged accomplice facilitating the cartelisation in the Gua tender process of SAIL is the retired senior official and ex-chairman of MECON who happens to be a Director and Advisor in the other shortlisted bidding company. In the collusion effort that resulted in the cartelisation, he has represented the L-1 Bidder in competition, on the second part.
Under heavy influence and pressure from the Office of the Steel Minister and directly under the auspices of a senior Director of SAIL who is presently on the verge of retirement (in February 2013 itself), it is now well known that subsequent to the price bid opening undue and unprecedented haste is being shown in the process and recommendations for the award of Contract at these highly inflated rates, by throwing dust in the eyes of the SAIL Board members and decision makers, the NGO says.
While the original estimates for the Gua Project was below Rs. 2,000 crore, (Rs. 1,950 crore) the recently established L-1 price of over Rs 2,700 crore signifies an attempt to swindle SAIL and the Central exchequer, off Rs. 750 crore (which is over 35 per cent of the original budgeted estimates for the project) in this deal. At the same time efforts have been taken to seemingly satisfy the procedures of tendering and adherence to CVC Guidelines.
This clearly is a matter that the whole tendering process for Gua Project, has been a farce where procedures have been fudged with the singular motive of generating huge kick-backs, loser’s fees, commissions, unreasonable profit margins, all together generating heavy financial losses to the exchequer.
The above subject reeks of heavy corruption, maleficence, a mega conspiracy in its worst form. The NGO sought the following action in its letter to the Steel Minister and board members (i) the present allegations are immediately enquired into (ii) the shortcomings in the faulty tendering process are duly spotted out (identified), and (iii) the hurried finalisation of the tender be halted, bringing to books the guilty responsible for this cartelisation leading to corruption.