The senators one after another termed the exemption a serious irregularity and violation of the Public Procurement Regulatory Authority (PPRA) rules during a meeting of the Senate Standing Committee on Finance in the chair of Senator Saleem Mandviwalla on Tuesday.
Chairman National Highways Authority (NHA) Jawad Rafique told the committee that Multan-Sukkur Motorway was part of the early harvest projects agreed on government-to government basis between Pakistan and China under China-Pakistan Economic Corridor (CPEC). He said China nominated its three state-owned companies as per framework agreement for the bidding. The bidding took place among three companies and one of them was selected for the project.
However, he was unable to give satisfactory response to questions of the senators about the cost of loans. "We have been taking loans at much higher rates from China as compared to the IMF and the World Bank," said Senator Nouman Wazir while other members of the committee endorsed him.
"We have been asking the government to make framework agreement signed with China for undertaking projects under CPEC public," he said, adding the government is not ready to publicize the framework agreement.
"The IMF and WB loans are at 3 to 4 percent interest rate while loans from China, including insurance coverage, cost Pakistan a 17 percent interest rate," he claimed and added that on the top of that "we have to accept the companies nominated by China for these projects."
Senators Mohsin Aziz, Nouman Wazir and Nasreen Jalil were of the view that Finance Ministry should take the matter of exorbitantly high cost loans seriously because this will be a liability for the future generations of the country.
Federal Board of Revenue (FBR) spokesman Dr Muhammad Iqbal said FBR always opposed tax exemptions due to their impact on revenue and it has only acted on the decision of the Economic Coordination Committee (ECC) of the Cabinet for issuance of SRO 47 on January 23, 2018.
The members of the committee said the government had allowed exemption on import of materials available in the country at the cost of local industry. Nouman Wazir said that PPRA only permit import of machinery and allowing import of material is violation of PPRA rules.