Oil, gas pipelines: Rs500m saved, though contract given at high price

Published: January 27, 2016
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FIA arrests seven OGDC officials and two contractors. PHOTO: AFP

FIA arrests seven OGDC officials and two contractors. PHOTO: AFP

ISLAMABAD: The Federal Investigation Agency (FIA) has succeeded in saving the national exchequer an amount of Rs500 million by taking action in relation to a multimillion-rupee contract awarded by Oil and Gas Development Company (OGDC).

The contract for Sinjhoro flow lines was given during the tenure of the Pakistan Peoples Party (PPP) government at a higher price, which prompted the FIA Islamabad Corporate Crimes Circle to initiate action.

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Under the project, the company had to lay oil and gas pipelines to connect with 13 wells. OGDC had estimated the engineering cost of the project at Rs270 million and put the tentative project cost at Rs350 million. However, the contract was awarded at Rs951 million.

The FIA noted that the standard rate of land acquisition was Rs40,000 per acre, but the OGDC management outsourced the land acquisition process and paid Rs298,000 per acre.

The FIA has arrested seven OGDC officials and two contractors in connection with the case.

On January 22 this year, while hearing a case against OGDC officers and project contractors, the court of special judge central Islamabad stopped the company from making any further payments to the contractors until the court arrived at a decision.

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Contractors Salman Mehmood and Fazalur Rehman also pledged in the court that they would not claim any payments until the matter was decided.

Of the total cost of Rs951.3 million, Rs457 million had so far been paid to the contractors. The project is now in the operational phase and OGDC is producing liquefied petroleum gas (LPG) and crude oil worth Rs79 million per day.

Published in The Express Tribune, January 27th, 2016.

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