High-level discussions ongoing on fate of TCRC contract

KABUL (Pajhwok): Discussions on the merit and disadvantages of the contract related to control over crude oil and gas are ongoing among senior government officials amid presidential directives to relevant authorities to revoke this deal.

Information from the Afghanistan National Standard Authority (ANSA) suggests the contract for quality control of crude oil and gas was signed between ANSA and an Indian company called Therapeutics Chemical Research Corporation (TCRC) for five years on December 10, 2019.

Documents available with Pajhwok Afghan News show TCRC won the contract on the basis of open bidding. Earlier, a local company known as Geo-Chem Middle East had held the contract got this project for five years.

After nearly one year and five months of the latest contract, different sources expressed different views regarding the TCRC contract.

• High Audit Office: In the contract, more contractual interests are registered than the government.
• Presidential Palace: In line with audit findings, it demanded the contract be revoked.
• Administrative Office: In the current circumstances, revocation of the contract is not in the national interest,
• Administrative Office Legislative Affairs Wing: International institutions shall execute the High Audit Office monitoring and shall evaluate the effectiveness of the contract.
• ANSA and TCRC: Contract-related matters were not settled with Geo-Chem. Ceo-Chem: Everything is settled.
• ANSA: The price of crude oil sample-testing jumped against the contract.
• ANSA employee’s letter: TCRC did not make investments. TCRC: 50 percent of the investment has been made
• ANSA employee’s letter: The Company did not deposit the guarantee amount. Document: more than $277,000 was deposited as guarantee amount

ANSA: Price of crude oil-testing increased against the contract:

A letter from ANSA, dated January 26, 2020, citing a clause of the contact between ANSA and TCRC, reads: “In case there is no change in imports, the price of sample testing is applicable as in the past.”

ANSA further says: “On the basis of evidence, there was no big change in imports. Subsequently, the contactor did not make any investment. Still, the price of crude oil sample-testing increased, which caused objections from different crude oil and gas importers in all ports of the country.”

ANSA head Aziz Ahmadzai said: “The crude oil sample-testing price increased two years back and it was ANSA’s decision and this was included in the contract with TCRC.” He added the current leadership of ANSA and the contractor had no role in this regard.

He said the previous ANSA administration increased the rate of the crude oil-testing in order to boost local revenue.

He, however, added: “The surge is not worrying. Up to $2 increase per tonne -- if it is further distributed to litres -- can be raised to 10afs.”

TCRC Leadership member Jamal Shinwari said the price of sample-testing was raised on the recommendation of ANSA’s orevuois administration and approval from the High Economic Council. No company had any role in this regard.

A document available with Pajhwok Afghan News shows the testing rate of one tonne of diesel, petrol and crude oil increased from $5 to $7, Soft drink gas, Co2 from $2 to $5, Aviation fuel from $6 to $8, lubricant from $4 to $6, LPG from $4 to $5.

TCRC says on average, 155,000 tonnes of crude oil is imported into Afghanistan monthly, resulting in $280,000 revenue for government exchequer and $500,000 for the company from testing of the quality of imported crude oil and gas.

Conflicting views on investment:

Another document regarding the handover of ANSA machinery to TCRC in Hairatan, Aqina, Farah, Nimroz, Islam Qala, Torghondai and Torkham reads: “According to the conditions and context of the contract, TCRC will operationalise its machinery at all ports within six months of its handover and will make investments in the ports.”

A letter from an ANSA employee to President Ashraf Ghani (copy available with Pajhwok) reads: “Handing over ports to TCRC has not taken place in line with the contract. However, it happened on the basis of a deal between ANSA head Ahmadzai and the TCRC chief.

“In line with the contact, the company is bound to make investments in purchasing new machinery soon after available equipment at ports is handed over to it. But this hasn’t happened three months after the handover of ports to the company. Assistant heads of ANSA investigated the matter. The ANSA head, however, prevented them.”

A letter, dated February 7, 2020 from the Technical Assistant Office of ANSA says according to the contract, the firm should make an investment of $6 million. But a year after the contract was awarded, no investment has been made.

It added: “The company has not made any investment despite its use of the state machinery for operations. It is pocketing revenue from the use of state machinery -- which is clearly in violation of the relevant law.”

The letter said at a time when the company has made no investment, the conduct for its operation and the use of the government machinery is questionable and needs clarity.

Meanwhile, KhawajaJavedSediqi, former assistant head of ANSA, accused the incumbent ANSA chairman of under hand deals with TCRC and added that ports were handed over to the company against the contract. Before submission of equipment to ANSA, the company should have made investment, he explained.

He said the terms and conditions of the contract worth $400 million had been prepared in a way that only the company would make $6 million investment.

Without naming anyone, he said, the fact that some individuals were against the implementation and handover of this project to TCRC, they often threatened and some tried to poison the owner.

A part of the Council of Ministers resolution dated January 07, 2020 said: “Regarding the company's investment, the following decision has been made. After the necessary investment, purchase and installation of equipment and creating a standard environment for laboratories by TCRC in the country's ports, the responsibility of port services in relation to quality control of petroleum products and liquefied gas would be handed over to the company.” The meeting was chaired by the then Chief Executive of National Unity Government Dr. Abdullah.

In response to Sediqi allegations, ANSA Head Aziz Ahmadza said: “Sediqi was directly responsible in this project. He was involved when the contract was prepared and signed, if not, then he should have been involved.

Items that provided upper hand to government should be made part of the contract, two months after signing the contract Sediqi sent letter to the TCRC Company to start work but later his thinking changed and it should be asked why his thinking changed at a time when he was part of this entire process. If there was problem in the contract he should have raised his voice, even he handed over Hairatan Port to TCRC.”

He said: “Sediqi has personal problem with the company, I will not allow personal problem to affect ANSA. For two years ,it was Sediqi’s responsibility, he did not clear matters with Geo-Chem. He is still friendly with Geo-Chem for not clearing the previous contract.”

Aziz Ahmadzai said: “The responsibility that ANSA has towards the implementation of the contract, it handed over six ports to the company last year, and if the company does not make its investment six months after the delivery period of the ports then it is against the contract and in case of violation of the provisions of the contract ANSA will take its decision.”

Referring to TCRC investment, Ahmadzai said: “In Hairatan port their investment was completed before the due date while in other ports the investment is underway. All relevant documents regarding TCRC investment have been shared with ANSA including items purchased and tariff payment invoices.”

Jamal Shinwari, leadership council head of TCRC, said the Islam Qala Port was handed over to them on November 16 last year, Torghondai on 17, Aqina on December 07 last year, Meel 78 Port in Farah on December 23 and Nimroz Port on January 03,2021.

According to Shinwari the TCRC will be making $6 million investment in all ports during six months period.

He added Hairatan Port which was handed over to TCRC on April 23,2020 witnessed 100 percent investment by the company and more than six months had passed since it was handed over to the company.

The TCRC company provided purchasing documents of equipment it purchased for the port so far.

Shinwari added TCRC has created control rooms in ANSA central office, TCRC Kabul office and TCRC Indian office to monitor sample testing and whatever is happening in the ports. This has been done to ensure transparency and fairness at a cost of $200,000.

Besides creation of control rooms, TCRC spent $195,000 on operationalization of equipment handed over to them by the state, he said.

Shinwari added in Hairatan, Aqina, Islam Qala, Torghondai and Nimroz ports laboratories had been established, in Jalalabad the equipment had been installed for sample testing, three technical employees had been hired in every lab. A suitable building constructed for equipment and administrative system for lab also made operational.

He said TCRC added 21 more necessary items needed in the labs beyond its contracting responsibilities.

Claim about non-deposit of bank guarantee:

The letter of February 7, 2021 from the technical deputy of ANSA to the financial office said under the contract, TCRC, was obliged to pay a guarantee of $11 million.

It asked the financial office whether or not the contracting company had acted in accordance with the contract in this case.

Based on principles of economic and joint investment ventures, the letter read:  “The contracting company’s failure to discharge its obligations in time and in accordance with the agreement can cause revocation of the contract. Not only the contract will be scrapped, all revenue collected by this company will also be returned to the government.”

Jamal Shinwari, a leading member of TCRC said about the guarantee payment: “Unfortunately, some employees of ANSA were unfamiliar with English, because the contract has no such stipulation. $11 million must be paid by the company as a guarantee.”

He said: “The contract stipulates that the winning company must insure the equipment and supplies, handed over to the company from the government, as well as the newly-purchased equipment, all of them costing more than $11 million under the contract.”

Jamal said under the agreement, TCRC had pledged more than $277,000 -- five percent of the total contract -- to be deposited as guarantee in Azizi Bank in accordance with the principles of the procurement office. The relevant documents were to be submitted to the National Procurement Authority and ANSA.

The bank report of TCRC, issued by Azizi Bank on November 4, 2019 (copy available with Pajhwok) said the company is based on letter 819 dated December 30, 2020, the winning company had deposited 277,812  US dollars as guarantee in the bank.

In the contract, more contractual interests are registered than the government:

According to the report on the sample-testing by TCRC Company, which was carried out by the high audit office under the guidance of the Presidential Palace and submitted to the general directorate of Presidential affairs office on February 4, 2021, the high audit office criticized the handover of ports to the company.

According to the report, the contract does not specify how much of the revenue will be transferred to the government in relation to the investment, if the contractor has not invested and will perform the sample-testing by the devices and equipment of ANSA.

The report, a copy of which obtained Pajhwok, said: "In the betting and the contract, the interests of the contracting entity are registered more than the interests of the government and the people of Afghanistan.

In the betting case, criminal cases, fines and compensation are not registered in the contract.”

The report also added: “The value of the devices and equipment assigned to the ANSA at the end of the contract is not specified and it is not stated the cost of the use of the devices and equipment of the ANSA, the damage and depreciation, how much should be transferred to the ANSA and in what condition.”

Significant increase in the price of testing petroleum products and liquefied natural gas compared to the previous contract and the bet, at least a percentage payment of the revenue earned for testing fuel and natural gas by the contracting equity, the legal provisions of the company have not been determined, considering the investment and expenses.

The High Audit Office also said that the financial capacity of the bidders, contrary to the procurement procedures, was included in the betting, which indicated a restriction and did not specify in the betting that laboratories would be transferred to the winning bidder before or after investment.

Contradictory statements on Geo-Chem clearance:

A letter from the Technical Department of ANSA on February 7 states that the company was responsible for insuring all equipment the government provided to TCRC. The firm, however, did not insure government equipment despite the passage of a year.

Shinwari, a leadership member of TCRC told Pajhwok the company, after signing the contract, had sent several letters to ANSA that it would provide all inventories that Geo-Chem had submitted to the government and then handed over to TCRC, based on the contract, for insurance.

He added that ANSA was yet to share any documents in this regard with the company for the insurance of equipment.

Shinwari accused former leadership of ANSA of failing to clear the dues payable by Geo-Chem. He said equipment handed over by the firm to the government was not set out in the contract. Its total value was less than what the company should have handed over to the government. However, Shinwari did not provide details about the equipment’s value.

Aziz Ahmadzai, the ANSA head, also said the equipment submitted by Geo-Chem to the government had not been insured by TCRC. Because dues against Geo-Chem were not cleared by former ANSA leadership.

ANSA has appointed a delegation to put a price on the pieces of equipment, based on which the new company would insure them.

ANSA has requested TCRC to insure the pieces of equipment the company itself purchased and imported into the country, he added.

Najmuddin Sayas, the Geo-Chem head, claimed the company had sent all the documents about equipment in ANSA possession to the authorities concerned and had cleared dues as well. He said they were ready to provide the documents again at the request of ANSA.

Audit findings require contract termination:

A letter from the Legal Unit of the President Palace, dated March 2, states the president, after assessing the High Audit Office’s report, asked Fazl Mahmod Fazli, chief of the Office of Administrative Affairs, that the Supreme Audit Office’s findings required immediate judicial followed and action about termination of the TCRC contract.

On March 17, Haroon Chakhansouri, former deputy chief of staff to the president, wrote to the Ministry of Industry and Commerce that the president had ordered the termination of contract with the company after reviewing a report from the Ministry of Foreign Affairs. He said if the firm tried creating problems, it should be referred to the Attorney General Office.

A resolution signed by ANSA legal advisor Bashir Bahram, during a meeting on October 8, 2020, said the contract with TCRC had been terminated. No new contracts would be signed with the company, he promised.

However, ANSA chief Aziz Ahmadzai insisted Bahram had no executive authority and the document signed by him was phony. “No such discussions have been held and the letter is possibly a conspiracy.”

Abbas Ibrahimzada, a lawamaker from Balkh province in a lower house session earlier this month accused the speaker of the lower house on 30 percent share and Ilham Omar Hotaki, head of National Procurement Authority (NPA) on 25 percent share in TCRC company and said that they several times requested for appointment of a probing team to investigate the contract with the company, but no one cared.

He had said that there was a president’s order the company should have referred to the attorney office because most of revenue collected from borders gone to the company instead of the government.

Ibrahimzada asked for the appointment of a team to probe the contract. He also warned of countrywide protests if such a team was not appointed. “If 100 dollar goes to the government, 1,000 dollar goes to the company on a daily basis,” he remarked.

Ahmad Shah Ramazan, another lawmaker from Balkh province, alleged a number of government officials, including the former NPA head, Ilham Omar Hotaki Da Afghanistan Breshna Sherkat (DABS) chief Daud Noorzai and Presidential Advisor Ajmal Ghani, a cousin of the president, had shares in the company.

About the former ANSA had, he said: “I don’t say it. The then ANSA head said it.”

In a letter from the Judicial Commission of the Wolesi Jirga, dated Jan. 2, 2020, a month after the contract was signed with the company, states the assignment, conditions and the contract with TCRC should be suspended following a decision from the National Economy Commission of the lower house.

Statements contradicting presidential orders:

The Office of Administrative Affairs said about the findings of the High Audit Office that the evaluation was not neutral or independent. The process was not conducted in a responsible manner.

“Termination of the contract is not in the interest of the government in the current situation and it would facilitate corruption for the people. Based on information, petroleum mafia and Geo-Chem) are trying hard to terminate the contract and participate again in fresh bidding,” it revealed.

A March 4 letter from the Office of Administrative Affairs at the Presidential Palace, which followed up on commitments, directions, orders and decrees, asked the High Audit Office to thoroughly investigate allegations of the audit team in the presence of credible international institutes and submit a detailed joint report.

Nh/sh/mds/mud