Procurement eats Nu 18.2B annually

GPP: The government and state-owned enterprises together has spent about Nu 91 billion on procurement of goods, services and works, exhausting about 61 percent of the total budget outlay in the 10th Plan.

On an average, Nu 18.2 billion was spent annually on procurement, which works out to 17 percent of the GDP.

The quantitative mapping of public procurement carried out by Green Public Procurement (GPP) revealed that a little over half the spending in procurement was from the government’s coffer, while almost equal portion came in as grants. The remaining nine percent of the total spending on procurement was raised from loans.

Ministries accounted for 52 percent of the total spending on procurement, dzongkhags spent 24 percent, state enterprises used 16 percent of the expenditure of procurement, and autonomous agencies exhausted the remaining 8 percent.

Works and human settlement ministry has the highest spending amounting to Nu 17 billion or 36 percent of the spending in the 10th Plan, followed by the ministries of agriculture and health.

Frequent and huge spending was made in infrastructure work such as roads, buildings and professional services. About Nu 42 billion was spent for these activities.

The report also reveals that major expenditures were incurred for office supplies, printing, publications and furniture.

Among the state enterprises, Druk Green Power Corporation Limited (DGPCL) recorded the highest spending, mainly on account of wheeling charges, followed by Bhutan Power Corporation’s (BPC) expenditure to purchase electricity from India’s Power Trading Corporation during lean months.

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Expenditure on plant and equipment, medicine and laboratory consumables, trainings, bridges and purchase of vehicles, among others, were the top ten spending areas.

Way forward 

The findings indicate a huge demand for consumption.

A high-level seminar on green public procurement involving parliamentarians, policy makers, judiciary and constitutional bodies was held in the capital yesterday.

“Government is the biggest procurer in any part of the world,” said Oshani Perera, director of public procurement, International Institute for Sustainable Development (IISD).

It was also revealed that procurers are often reluctant to include sustainability features in tenders because environmentally and socially preferable goods and services add to the cost.

However, an analysis of public procurement carried out by GPP Bhutan highlighted that procuring goods and services that are energy efficient, non-polluting, recyclable, and those that enhances local skills and promotes local brand are more cost-efficient and sustainable in long run. Thus, the experts said GPP has multiplier benefits.

Practicing GPP can be an effective tool for implementing existing policies and goals of equitable and sustainable economic development.

“Don’t just think at lowest bidding price. Cheapest things you buy may breakdown,” said Oshani Perera, adding that government should come up with programmes to buy more from small and medium enterprises in the country.

The project director of GPP Bhutan, Kezang, said there is a policy space and existing laws which are in harmony with GPP. “It is just a matter of integrating environmental and social criteria with the procurement rules and regulations to promote export orientation, import substitution and employment generation.”

For instance, while awarding a printing work, the tender evaluation should consider energy efficiency, use of recycled paper and social criteria like employment apart from operating cost and lowest purchasing price.

The works and human settlement minister, Lyonpo Dorji Choden, said procurement unit in all agencies is a very small unit manned by junior staff. Procurement, she added, should be aimed at getting the value of money, not simply at the point of purchase but also over the life cycle of the assets.

GPP’s market assessment of green goods and services in the country also pointed out that a closer attention is required in implementing GPP practices.

For example, when the bill of quantities in the tender document mentions “red bricks”, the supplier has no choice to use locally produced hollow bricks. The market assessment report says that tender documents should provide options to contractors to use green and locally available materials.

The GPP submitted 10 recommendations to the government to embed GPP practices in its existing policies, regulations and their implementation.

The recommendations include training for public procurers, capacity building of suppliers, creating awareness among leaders, incentivising cottage, small and medium industries, and selecting pilot tender projects like green road and green building, among others.

“Bhutan could show the world that it is buying green,” said Oshani Perera, adding that this could send a strong message to foreign investors.

Tshering Dorji

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