Loss to the state from foolproof liquor sticker scheme
The much- delayed, scheme of affixing foolproof stickers on legally manufactured liquor bottles gets underway causing a heavy loss to state coffers owing to awarding the tender to an Indian firm at a high price, amidst allegations of malpractices.
The Excise Department has banned the sale of all brands of imported liquor without the foolproof sticker scheme which was launched last week.
It has been extended to foreign liquor manufactured here and local liquor as well.
State coffers have been deprived of approximately Rs 40 billion in excise revenue over a year, due to procedural delays since 2017 in implementing the proposed foolproof sticker label on each legal liquor bottle and can of liquor, a senior government official said.
The department has carried out procurement activities to supply safety stickers for liquor bottles and liquor related products establish and maintain a safety sticker management system heeding a proposal made by the then Finance Minister Ravi Karunanayake in November 2016.
That proposal was incorporated in the Budget 2017 in which every tax-paid bottle of liquor must be affixed with a foolproof sticker.
The tender was first called on April 24, 2016 with the closing date being June 20, 2016 and Indian company MSP was awarded the tender while the lowest bid was rejected citing a technical matter.
Newspaper advertisements calling for fresh tenders were published on January 15-16, January 2017, and the technical evaluation committee recommended MSP once again.
MSP’s bid in the first tender was US$3.19 to print the stickers, but it almost doubled to $5.99 at the second time.
Accordingly the same rejected supplier was selected again to supply the stickers while the price quoted for the second time was higher than the price of $ 2.8 quoted by the same previous bidder (MSP).
Thus the government has been compelled to pay an additional amount of $ 1,075,200 for 384 million stickers obtained in the first year, the Auditor General’s recent report revealed.
It has also been revealed that this same company has supplied similar stickers to liquor manufacturers at a cheaper price while supplying the same sticker to the Kenyan Government.