The government of Sindh has decided to conduct fresh pre-qualification process for re-tendering of modern grain bulk storage facility, a mega project for the wheat storage in the province.
Sources told Business Recorder on Wednesday that recently Sindh Food Department (SFD), acting on behalf of the government of Sindh, has invited pre-qualification applications from prospective bidders in respect of a project for the financing, construction and operation of bulk grain storage and handling facilities in the province on Build-Own-Operate basis.
This is the second pre-qualification bidding process being conducted during the last two years for construction of modern grain bulk storage facility as previously in 2012, the government of Sindh had conducted pre-qualification process for the purpose. “Despite the fact that three companies have already pre-qualified for this process last year, government of Sindh is once again asking private sector to go through the pre-qualification process, which would require time and massive financial resources to do the same,” they added.
In the previous pre-qualification process, Matco Rice (Pvt) Ltd, Pak-Turk Consortium and Fauji Akbar Portia & China Harbour Engineering Company Consortium were declared pre-qualified. The basic aim behind this project was to encourage private investment in the agricultural industry leading to improved operational efficiencies and reduce financial loss to the government and consumers from wastage/damage during grain handling and storage. Every year thousands of tons of wheat is being damaged in Sindh during rainy season because of unavailability of proper storage facility.
Sources said the government of Sindh has decided to award this project through a transparent and competitive bidding process, in the application of the Sindh Public Private Partnership Act 2010 and of the relevant provision of Sindh Public Procurement Rules 2010. The SFD has engaged International Finance Corporation (IFC) to act as transaction advisor for the project.
As per the tender document, pre-qualification applications can be submitted till February 17, 2014 at 2pm at SFD office. Applications will be opened within one hour of the submission deadline and pre-qualified bidders will be invited to participate in the bidding stage of the competitive bidding process for setting up of the facility in Sindh.
Sources said the invitation for pre-qualification applications may get the same result like previous year, when ‘modern grain bulk storage facility project’ failed to attract investors/bidders due to strict conditions, and not a single company participated in the tender in 2012.
“Government replicates this exercise after every few months and unlike previous tenders which failed to attract investors/bidders due to strict conditions, this tender may also go waste,” stakeholders said. Private sector/companies spent millions of rupees for the preparing the documents and making the feasibility reports and every time money goes waste, they added.
Agriculture advances have increased Pakistan’s grain production, but much of that surplus is not feeding the population. There’s a big problem Pakistan’s grain storage facilities have not kept up with the grain’s pace of development. As a result, grain surpluses are now being stored outside, they pointed out.
Last year, before the bidding process, a pre-bid meeting was also arranged by IFC to discuss the investment and technical issues. In pre-bid meeting investors/pre-qualified parties showed their reservations on strict tender conditions and in the light of companies concerns, some changes were also made, they informed. Previously, Sindh government fixed October 16, 2012 as last date for submission of bids for modern grain storage facility, however not a single pre-qualified company participated in the tender, leaving the whole process in jeopardy.
Stakeholders said strict tender conditions had restricted investors/companies from participation in the tender for grain storage facility project. Although, some demands of investors/pre-qualified companies were accepted in the pre-bid meeting, however there were many other conditions, which did not allow the companies to participate in the first tender.
This whole project is very expensive as it has been designed to incorporate modern grain storage system and technology to ensure the quality of stored grain to be maintained as per agreed specifications. On the other hand, investors voice concerns that provincial government will not be able to pay high storage cost of these storage systems, they said.
According to the previous tender’s terms and conditions, a single party could bid only for the complete project not for the single unit…..meaning if a party bids for development of storage facility in Sindh, it has to arrange an amount of over Rs 10-12 billion to initiate the project, they said.
They said multiple fines, high cost, high consultancy fee and strict conditions were some of the reasons for which not a single company participated in the tender and a modern storage facility project was delayed. The existing storage facilities are insufficient at various levels to come with large increase in production and presently, hundreds of tons of wheat packed in jute bags are stored in godowns located in the Hawksbay, Karachi, and other parts of the province which is being damaged due to negligence of local authorities, pilferage and heavy rains.
In order to increase the storage life of wheat, the foremost priority be given to store it in godowns or silos scientifically constructed with proper light and temperature arrangements. Presently, in Pakistan, proper storage facilities both in public and private sectors are far below the requirements and billions of rupees are lost every year due to absence of improper storage facility. These faulty arrangements in the public sector are available mainly for wheat, rice and cotton.