April 08, 2012 - Lahore: By procuring 110,000 laptops with inferior and outdated processors through a local company instead of directly from the manufacturing company at a much higher than normal price, the Punjab government incurred a loss of at least Rs 1.7 billion to the provincial kitty, Daily Times has learnt.
The Punjab government has bought Dell laptops with outdated Pentium-D processors for Rs 4 billion at a rate of Rs 37,000 per laptop. But the retail market value of this machine is not more than a maximum of Rs 25,000.
In the case of purchase in bulk, the machine’s price would not have exceeded more than Rs 20,000 per piece. Thus, the Punjab government has paid a whopping amount of Rs 1.70 billion in excess of what it should have spent to buy the lot.
Sources say the Punjab government favoured the supplier company by providing it the payment in advance for opening the Letter of Credit (LC). This method is called back-to-back LC. The supplier invested no money of its own for the purchase, the sources added.
Under the law, a copy of any government’s contract worth more than Rs 500 million needs to be sent to NAB, but, intriguingly, the Punjab government has not done so, insiders said.
In addition, the laptops distributed by the provincial government do not carry any guarantee, which is in contrast to the normal practice despite the fact all such machines sold by distributors in the market carry at least a one-year guarantee.
The laptops distributed among Punjab’s students are made of Dell, China, bearing model InspironN4050, but the specifications of the machine distributed by the Punjab government are different from the same model in the market. The Dell-InspironN4050 runs on i3 or i5 processors while the machine provided by the government runs on Pentium-D processor – a processor which is slightly advanced than Pentium-4 but less powerful than Dual Core. Other specifications are as following: (a) Pentium-D processor – a 2.1 GHz processor (b) RAM 2 GB, DDR3, and (c) hard disk 320 GB.
The laptops have Linux-based Ubuntu operating system. The BIOS of the laptops is customised for Linux system and does not support Microsoft Windows, which is widely used in Pakistan. To install Microsoft Windows, the BIOS of the laptops requires upgrading that costs Rs 4,000 per laptop. The Punjab Planning and Development (P&D) Department has bought the machines while the Higher Education Department is responsible for the distribution.
Sources say the laptops have not been purchased directly from the Dell company, which is a normal way of procuring machines in bulk. Instead, the machines were procured through a Pakistani company. When machines in bulk are purchased by large companies or governments from the manufacturers, they are available in less than half the retail price. In this case, the machine’s realistic price could not be more than Rs 20,000 in the wholesale agreement. The government asked the interested parties to submit a hefty amount of Rs 30 million as a surety amount, which crowded out other bidders because they could not submit this amount. Only one company remained in the field and thus enjoyed virtual monopoly to fix the price of the laptops.
The government opened a back-to-back LC to favour the supplier. It means the government provided the company money in advance for opening the LC. Thus, the supplying company invested not a penny to buy these machines from Dell, China. The Punjab government provided all the money, while the supplier reaped huge benefits.
The processor and the motherboard of the laptops are a redundant technology for the last five years. After the Pentium-D (a slightly modified version of Pentium-4) advanced processors of Dual Core, Core 2 Duo, i3, i5 and i7 were introduced in the market. No company now sells laptops of this P-4 technology. The supplier has made huge profits by using low-quality, redundant and cheap processors in the laptops. The laptop machines with much-advanced processors are available even in the retail market in the same price of Rs 37,000.