Like a vampire squid, FWO and NLC are bleeding Pakistan dry of its productive capacity
The first thing you need to know about FWO and NLC (read military owned/operated enterprises) is that they are everywhere.
This may be the last post of this substack. If you like it, please share it widely. If you are reading it over email, it may have been clipped. Click on the headline above to read it on the substack website.
image source: https://twitter.com/Dontdoit_doit/status/1529735080159346688?s=20
The below sentence made Matt Taibbi, Goldman Sachs, and vampire squid household names.
The first thing you need to know about Goldman Sachs is that it is everywhere. The world’s most powerful investment bank is a great vampire squid1 wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.
— Matt Taibbi in Rolling Stones
I can change a few words, and it’s equally applicable to FWO and NLC
The first thing you need to know about FWO and NLC (read miltary owned / operated enterprises) is that they are everywhere. Pakistan’s most powerful businesses enterprise is a great vampire squid wrapped around the face of economy, relentlessly jamming its blood funnel into anything that smells like money.
— Aap ka bhai in this short lived substack
Why am I calling it short-lived? I have been debating with myself whether to write on this topic for the last few days. Like all writers, I want my every post to go viral. The problem is with this post I am venturing into an area where angels fear to tread. A much more resourceful person, a person who is known to be close to powers that be, whose entire investigative journalism career comprised of publishing news presented to him from Aabpara (IYKYK), tweeted the below 5 days ago and was immediately compelled by earthly gods to delete it.
In comparison, I am just a humble blogger, hiding behind a pseudonym, who isn’t well-connected. In the unfortunate circumstance that this post gets some traction, it will mean that I have to delete this substack, may also have to delete my Twitter account where I document most of this stuff and go for a sightseeing trip to northern areas. There are worse outcomes, but I don’t want to think about those, as then this post won’t ever be written.
I will try to use tweets as much as possible to convey the message as the last time I wrote about something like this, Advisor to CM Buzdar on Digital Media Azhar Mashwani created a fake Twitter account of Meinhardt Pakistan and tagged FIA Cyber Crime to go after me for spreading fake news.
I wrote about it here.
If you want to read the original post, it’s here
Back to the topic of this post. It appears that the private sector has had enough. They published the below in the newspapers last week.
The CAP must be really desperate to reach out to Shehbaz Sharif last week when it wasn’t clear if the government will survive till the end of the week as the news was circulating that government is seeking certain guarantees from the powers that be. The very powers that the aforementioned ad is criticizing for taking away all business.
The desperation can be gauged from the fact that
Fugitive from justice Nawaz Sharif is addressed as Honorable former Prime Minister of Pakistan
His name is mentioned in full twice, and once even in bold to show respect.
Reference is made to his “clear vision” which is written in bold and in ALL CAPS and further states that his vision “is a proven fact”.
So what’s going on that made CAP so desperate. The last bullet point in the ad referred to changes in PPRA rules.
Cabinet exempts state-owned entities from ‘transparency rules’
The federal cabinet has amended the procurement rules to allow the government to award contracts to the state-owned enterprises without floating public tenders, which may compromise transparency in public sector deals.
The federal government notified the amended Public Procurement Regulatory Authority (PPRA) rules on June 29 after approval from the cabinet, according to the notification.
The changes were specifically to rule 42(f) of PPRA rules which was amended on June 29, 2021, by the federal cabinet.
(f) Direct Contracting with State Owned Entities.-
A procuring agency may engage in direct contracting with state owned entities such as professional, autonomous or semi-autonomous organizations or bodies of the Federal or Provincial Governments for the procurement of such works and services, including consultancy services, which are time sensitive and in the public interest, subject to the following conditions, namely:-
(i) the organization or the body to be engaged in direct contracting shall be eligible to perform the works or render the services;
(ii) the organization or the body shall accomplish the work or the services including consultancy services, exclusively through its own resources without involving private sector as a partner or in the form of a joint venture or as a sub-contractor;
(iii) in case there are more than one organizations or bodies eligible to perform the works or render the services, the procuring agency shall hold competition amongst them through limited tendering (notifications) without any advertisements, however, giving reasonable time for submission of their applications or proposals;
(iv) the procuring agency shall devise a mechanism for determining price reasonability to ensure that the prices offered by the state owned entities are reasonable for award of the contract.
Read the bold section above. The trick is to classify the project as “time-sensitive and in the public interest”. Subsequently, all road work in Islamabad was given to NLC and FWO. Some examples,
Example 1
This is the Rs.22.8 billion Rawalpindi Ring Road (R3) project for.
RDA Chief Engineer Dr Habibul Haq Randhawa, who is deputy project director of the R3 project, told Dawn that…FWO had quoted a price Rs300 million less than the estimated cost
Earlier, Pakistan’s nuclear command was also engaged in this high-profile controversial project.
Example 2
Example 3
This isn’t even time-sensitive
Example 4
There is nothing “time-sensitive” here, but still.
All this is happening while the country is grappling with a constitutional crisis, and some would say there is a remote possibility of a default. I made a couple of memes to appreciate the single-minded focus of FWO and NLC.
The change in rule 42(f) was just a final nail in the coffin. FWO and NLC have been sucking spreading their tentacles (do squids have tentacles?) even before the change. See below for some examples before the change in rule 42(f) was made. In some case, FWO and NLC don’t even have the capacity to carry out those projects.
Example 5
Example 6
Example 7
CDA is seeking exemption from PPRA rules asking to award the contract to FWO without bidding.
Example 8
Example 9
Example 10
Commercial activities are also strategic objectives
Example 11
“Binding legal precedents, expounding on the procurement laws, were also disregarded by the FBR. The FBR also contravened the bidding procedures. The NCSPL was brought in through the proverbial backdoor without having participated in the bidding process. The NCSPL had no experience to track and monitor cargo nor did it have the requisite technical skills. The material bidding terms were changed, diluted and retailored for the NCSPL and this was done to enable the FBR to award it the contract. The FBR is supposed to safeguard the interest of the exchequer and of the citizens but it subverted them to benefit a highly conflicted company.”
Example 12
Example 13
The shit that you can’t make up.
Example 14
I have an entire thread documenting 107 incidents of state capture, mostly by FWO and NLC during PTI’s tenure of 3.5 years. You can follow the entire thread from here. It goes up to 107.
Why didn’t CAP reach out to PTI regime? Most likely, and this is me speculating, the one-page regime was so prevalent that CAP didn’t think there was any possibility that PTI government will ever go against those who brought them into the government and who actually made the change in PPRA rules. During the General Faiz controversy, Imran Khan liked to say that his government isn’t a rubber stamp. It was news to me as his cabinet did act like a rubber stamp at least on one occasion.
There is a small mistake in the tweet. Lt Gen Ali was and is a serving general.
CAP isn’t wrong when it says that awarding such contracts to FWO/NLC will lead to the private sector never developing the capacity to execute the large local and international projects. Competition Commission of Pakistan said this much in 2014 specifically naming FWO and NLC.
CCP ISSUES POLICY NOTE TO GOVERNMENT TO WITHDRAW EXEMPTIONS FROM FWO, NCL & NLC
CCP took notice of concerns raised through media on exemptions granted to the National Logistics Cell (NLC). CCP gathered further information about similar exemptions extended to other undertakings in the construction sector, and it was revealed that the Frontier Works Organization (FWO), National Construction Limited (NCL), and National Logistic Cell (NLC) also enjoyed such exemptions. Under these exemptions, the entities concerned are not required to furnish Performance Bond and Bank Guarantee against Earnest Money, and Bank Guarantee for Advances in the case of government works contracts.
…
Private sector contractors cannot compete for such projects due to these ‘exemptions’. In the long run, this affects their growth and international competitiveness. As the private sector contractors cannot participate in national level construction projects, they cannot develop, strengthen and upgrade the technical expertise that is required of global players.
…
The Commission estimates that the cost advantage (in terms of contract cost) to FWO, NCL, NLC is 30%,22-25% and 30-35% respectively.
If I were to summarize what CCP is saying, it is saying that giving contracts to FWO and NLC is damaging to the long-term health of Pakistan’s economy. As if,
like a vampire squid, FWO and NLC are bleeding the country dry of its productive capacity.
— app ka bhai
Example 15
This is not to say that things have changed under the new government. I have started a new thread on state capture under the new government. Two recent examples.
Example 16
There is a reason why bureaucracy opts for this.
Some examples
Example 17
Because why would you audit such shoddy construction
Example 18
If you like this post, do share it widely, before it gets taken down.
For the pedants reading this post, I know that the vampire squid isn’t really a blood-drinking squid. But the metaphor has really taken off. So what can you do?