PM investigates Rs25b FBR contract

PM investigates Rs25b FBR contract

A committee headed by a top bureaucrat has initiated an inquiry to hold more individuals accountable in the Federal Board of Revenue (FBR) for awarding a botched Rs25 billion contract aimed at tracking the company’s production activities. This is despite other fact-finding bodies concluding that there was no wrongdoing in the awarding of the agreement.

The committee, headed by Finance Secretary Imdad Ullah Bosal, began its investigation following a directive from Prime Minister Shehbaz Sharif who, a day earlier, denounced the Track & Trace system—an initiative aimed at curbing tax evasion—as a complete fraud on the country and the economy.

This marks the fourth inquiry ordered by Sharif into the Rs25 billion track and trace contract, which was awarded by the Pakistan Tehreek-e-Insaaf (PTI) government. The former governor of the National Bank of Pakistan (SBP), Tariq Bajwa, conducted an earlier fact-finding inquiry but found no evidence of irregularities in the awarding of contracts.

Finance Minister Muhammad Aurangzeb is also conducting two separate investigations into the same contract.

A newly formed four-member committee was tasked with identifying those responsible for the award and flawed implementation of the Track and Trace project. Initially introduced in 2019 to combat tax evasion, the Track & Trace system was first implemented in the cigarette industry before expanding to other sectors such as fertilizers and sugar.

The role of the former and current project director of the Trails and Trails Project is under scrutiny.

This move is in line with the prime minister’s commitment to zero tolerance for corruption and incompetence in the FBR, and follows his decision to sack 25 affected officials from the tax machinery, including a Tamgha-i-Imtiaz recipient, who was awarded the honor by the previous Sharif government.

Sources indicated that the Bosal-led committee held proceedings on Saturday and sought additional information and documents from the FBR to assess the involvement of FBR officials in the flawed conception, design and implementation of the project.

Besides Bosal, the committee consists of Nauman Khalid, Member of CDA Technology; Babar Najeeb Bhatti, Chief Executive Officer of the National Information Technology Board; and Owais Nauman Kundi, Additional Secretary for Law and Justice.

Karamat Chaudhry, Member of the Digital Initiative, represented the FBR before the committee.

Earlier, the prime minister had established a fact-finding committee under former SBP governor Tariq Bajwa. The committee attributed the delay and poor implementation of track and track projects to the FBR, contractors and manufacturers. However, it found no evidence of wrongdoing in awarding the contract. The source however said that the PM was not satisfied with this finding and decided to set up another committee headed by his trusted bureaucrat Imdad Ullah Bosal.

Following the review of the fact-finding committee’s report, the prime minister has directed a newly constituted inquiry committee to identify those responsible for deficiencies in project concept, contract design and implementation by FBR.

According to information from the PM’s Office, poor implementation of projects has resulted in serious delays and delays, resulting in continued loss of government revenue.

The committee was tasked with determining responsibility for approving poorly designed requests for proposals for contracts. It will also identify those responsible for signing inefficient and unstructured Service Delivery Agreements with contractors, which have no provision for third-party audits.

Another task of the committee is to identify the officials responsible for the inordinate delay in forming the supervisory board and the sector committee. Likewise, the committee will investigate why necessary changes are not being implemented in the system to address issues highlighted by contractors through change requests.

Furthermore, it will determine accountability for failure to integrate traceability systems across the supply chain.

The PTI government has awarded an estimated Rs25 billion contract to a consortium comprising M/s AJCL, MITAS and Authentix, but the system remains largely dysfunctional. While operating in the tobacco and fertilizer sectors, track and trace systems face challenges in the sugar and cement sectors. Counterfeit stamps are also found on cigarette packaging in the tobacco sector.

A consortium led by AJCL won the contract based on the highest technical score, although its financial bid was 52% higher than the lowest bid. Price difference between bids the lowest finance Rs499 per thousand stamps and the second highest bid offered by AJCL Private Limited consortium was Rs259 per thousand stamps.

This resulted in an additional payment of Rs8.5 billion to the bidder over the five-year contract period. Total estimated five years cont the actual value is Rs25 billion. The five-year contract can be extended for another three years, bringing the total additional financial impact to Rs13.5 billion.

Former prime minister Imran Khan inaugurated the Track and Trace system in 2021 for electronic monitoring of manufacturing and sales in key sectors such as tobacco, fertiliser, sugar and cement.