CIAA directs Nepal Telecom to scrap NGN contract
The Nepal Telecom (NT) bid to start next generation network (NGN) service suffered a setback on Monday. The commission for Investigation of Abuse of Authority (CIAA) directed NT, the largest telecom operator in the country, to scrap its decision to award Rs 1.35 billion NGN contract to two Chinese companies, ZTE Corporation and Huawei.
After a three month-long investigation, the anti-graft body reached the decision that the contract was against the Public Procurement Act and that the bidding was done by four companies—ZTE, Huawei, Nokia Siemens and UTSTAR—not eligible to provide quality service.
“The commission has directed the management committee of NT to cancel the contract. If it ignores our directive, we will take action against it for corruption,” said CIAA Spokesman Ishwori Paudyal. He said that the NT’s decision to award the contract to the two companies was against the broader interests of the institution and consumers.
The NT board on Aug. 1 had decided to award the contract to ZTE and Huawei to work on a package basis to supply equipment to install the NGN in the country. As per the contract, ZTE was assigned to make the NGN service available in Kathmandu Valley while Huawei would do it in the rest of the country under Package B. The NT board had said that the contract had been awarded to ZTE to supply equipment worth US$ 10.3 million for Package A and to Huawei to supply equipment worth US$ 8.7 million for the project. The CIAA investigation found that Huawei had the lowest bidding among the final four short-listed bidders. Huawei had quoted Rs 1.67 billion (US$ 22.2 million) for the NGN contract while ZTE Corporation had quoted Rs 1.76 billion (US$ 23.5 million) for the same.
Instead of awarding the contract to the lowest bidder, the NT decided to award the contract to both ZTE and Huwaei on a package basis. CIAA sources say NT’s decision to award the contract to the both was against the Public Procurement Act.
Initially, 10 international firms had submitted proposals to supply equipment for the NGN. However, the bids of only four—ZTE, Huawei, Nokia Siemens and UTSTAR—were studied by NT’s evaluation committee. Nokia Siemens and UTSTAR were rejected in the second round of the selection process because of their higher bids. UTSTAR and Nokia Siemens had proposed to supply NGN equipment for US$ 25 million and US$ 31 million, respectively.
The CIAA source said the main concern was that none of the four short-listed companies had fulfilled the criteria for bidding for the project. “It is the procedural aspects we’ve questioned,” said the CIAA source.
Even the Unions at the NT were against the management decision to give the NGN contract to ZTE. According to them, ZTE was given the contract despite knowing the fact that it failed to complete the project to add 3.5 million GSM subscribers on time. ZTE has been bagging the infrastructure-related contracts from the NT since last few years.
NT has been targeting to introduce cable television and internet via its landline telephone network using NGN technology focusing on rural areas where data service is not available. It had planned to start installation of NGN technology having 666,000 lines (272,000 POTS, 145,000 DSL and 250,000 SIP/VOIP) this year.
The NGN is a system that will replace the current PSTN network around the world used to carry voice, fax and modem signals. It is essentially a managed IP-based (i.e., packet-switched) network that enables a wide variety of services. Among these services are VOIP, video conferencing, instant messaging, e-mail and other kinds of packet-switched communication services.
After NT’s decision to award the contract to the Chinese companies, the CIAA intensified its investigation and seized all documents related to the contract following complaints from civil servants. The NT termed the CIAA investigation into the NGN contract as the work of ‘invisible forces’ to hinder its expansion drive. Its initiative on NGN had started three years ago.
However, it had failed to call tender early following the long procedures. When asked about the CIAA decision, NT Spokesperson Surendra Prasad Thike said he had no idea about it.(Source: ekantipur)