Tribunal’s order: Admore to pay OGDC Rs40m in outstanding bills

Will also pay late payment surcharge at 14% per annum

ISLAMABAD: Oil and Gas Development Company (OGDC) - the state-owned hydrocarbon exploration giant - has won a case against oil marketing company Admore Gas in the country’s arbitration tribunal, which has directed the latter to clear outstanding bills of Rs40.18 million for receiving oil supplies.

Admore would also pay late payment surcharge on the longstanding dues, the tribunal said in its ruling announced about a week ago.

An understanding reached earlier between OGDC and Admore also covers payment of principal and 14% late payment surcharge per annum.



According to a petition received by the tribunal, the two companies had entered into an agreement in 2007 for the sale of 80 RON (Research Octane Number) gasoline from OGDC’s Dhodak gas and condensate field.

Admore agreed to purchase 360 barrels of gasoline (petrol) every day at a price equivalent to the price of 87 RON gasoline in accordance with the terms of the agreement.

They had also agreed that the deal would come to an end after OGDC consumed the entire volume of Tel-B (tetraethyl lead-B), stored at the Dhodak field and used for the production of gasoline.

In line with that, OGDC supplied the required gasoline to Admore. However, the dispute arose when the oil marketing company failed to pay bills for April and May 2009 amounting to Rs40.18 million.

“Pursuant to the findings, the claimant (OGDC) has fully discharged its obligation under the agreement while the respondent (Admore) acted in clear breach thereof,” the arbitrator observed.

“Therefore, it is fair and equitable to compensate the claimant by directing the respondent to pay the outstanding Rs40.18 million along with late payment surcharge at 14% per annum, till the amount is paid by the respondent.”



However, the arbitrator did not award the cost of litigation or arbitration in the absence of such a provision in the agreement.

Talking to The Express Tribune, an OGDC spokesperson said they had appointed the arbitrator to settle the issue of outstanding bills. “The arbitrator has given the verdict in favour of OGDC,” he added.

Admore Gas (Private) Limited is in a sorry state these days as it has paid millions of rupees in penalty to the regulatory authority for failure to build critical storages in the country.

The company is currently running its business after winning a stay order from court against the suspension of its oil marketing licence.

Admore got the marketing licence in 2003 after meeting all the criteria. At that time, Anwer Masud Zaidi was the major sponsor of the company with 70% shareholding. He later sold 51% of shares.

The company was required to develop oil storage facilities that could keep stocks for 20 days. Not only Admore, all oil marketing companies need to build storage tanks to meet domestic demand and stave off any threat of shortage.

However, after more than a decade, storages were nowhere to be seen, leading to suspension of Admore’s marketing licence on a number of occasions.

Published in The Express Tribune, September 23^rd, 2016.

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