Tobacco Track and Trace in Pakistan – Mission Impossible

First, we hear that the Pakistan Federal Board of Revenue (FBR) is on the point of awarding a track and trace contract for tobacco, sugar, cement, fertiliser and beverages to the highest scoring bidder in its latest tender. Then in the next breath, we learn that complaints have been received against the FBR over anomalies in the bid evaluation process.

Again! This is a situation that is increasingly resembling ‘Groundhog Day’ – the movie, that is – where Bill Murray was condemned to reliving the same day over and over again. It is also a situation that has led the online magazine Qrius to label Pakistan’s ongoing attempts to implement tobacco track and trace systems (in particular) as ‘mission impossible’.

For nearly a decade, the FBR has been struggling to award a contract for a tobacco track and trace system. After legal challenges forced the cancellation of a decision made under suspicious circumstances last year, the new complaints surrounding this latest attempt to award a contract serve to confirm that the structural issues that have plagued past tenders remain unresolved, reports Qrius.

Fresh indications of the FBR’s failure to carry out a transparent track and trace tender emerged during January’s bidding process, which saw the FBR evaluate the bids of eight companies deemed ‘technically compliant’. The scoring was cumulative, combining the firms’ technical scores with their financial scores (the quoted cost of the contract).

This stage of the process was meant to be transparent, with each bidder’s technical score made public before bidding began. Instead, both the competing bidders and Pakistani civil society groups grew suspicious after one bid was declared the ‘most advantageous bid on the basis of the combined highest score,’ despite a quoted cost that was 52% more expensive than the cheapest bid.

Nor was that the only anomaly; the company which had received the second highest technical score during the FBR’s 2019 attempt to award the contract, obtained the worst technical score this time around, reports Qrius.

The contract, reportedly worth between 25 and 39 billion Pakistani rupees ($157-245 million), is intended to curb rampant tax evasion and counterfeiting, which costs the government Rs20 billion per year in the tobacco sector alone.

Previous contract awards have ended in litigation, including the FBR’s attempt to issue the contract to a National Radio & Telecommunication Corporation (NRTC) joint bid with INEXTO – known for its ties to the tobacco industry – in 2019. A scandal over the NRTC’s mislabelling of its bid price snowballed, sending the FBR back to the drawing board.

This latest attempt looks set to end in similar fashion, after the Pakistani branch of anti-corruption organisation, Transparency International, raised concerns that the FBR has cost the exchequer some Rs13.5 billion through violations of procurement rules.

One of the competing bidders has also challenged the FBR’s decision, seeking a detailed breakdown of the evaluation scoring. In a statement, the bidder argued that the ‘transparency of the entire process being conducted by the licensing committee is severely compromised’ by the failure to disclose the precise evaluation criteria.

The FBR’s struggle to conduct a transparent process is all the more surprising given the international pressure on Pakistan to get a tobacco traceability system up and running. According to the terms of the country’s $6 billion IMF bailout in 2019 (of which a fresh $500 million tranche is expected to be paid out shortly), Pakistan was supposed to have track and trace in place by March of last year.

Big Tobacco’s suspected involvement

Why has the FBR shown such a disappointing lack of resolve with so much on the line? Qrius asks. The root cause of the FBR’s difficulties, as outlined in a comprehensive OCCRP (Organized Crime and Corruption Reporting Project) investigation last year, appears to be Big Tobacco’s extensive influence in Pakistan, a country with an estimated 24 million smokers. The OCCRP confirmed that some of the world’s largest tobacco companies have been complicit—and even actively involved—in the black-market production and trade of their own products in Pakistan.