Engineering and construction: OGDCL may award gas field contract to Kahuta Labs

Company directors meet today to finalise the contract.

Zafar Bhutta June 14, 2011


The board of directors of Oil and Gas Development Company Limited (OGDCL), which is scheduled to meet today (Tuesday), is likely to accord formal approval to the award of $186 million engineering, procurement and construction contract for Uch-II oil and gas field to state-run Kahuta Research Laboratories (KRL).

Some officials said the OGDCL’s move to award the contract to KRL would lead to contempt of court proceedings as PPP MNA Ayatullah Durrani had already obtained a stay order from the Islamabad High Court, directing OGDCL not to award the Uch-II engineering contract.

The project is being awarded to KRL following a proposal of Planning Commission Member Energy Shahid Sattar. The OGDCL board has already approved, in principle, a technical proposal of KRL and the management will now seek a formal approval of the financial bid.

Petroleum Secretary Ijaz Chaudhry, while talking to The Express Tribune, said a tender had been cancelled earlier and now the proposal would be considered to award the contract to KRL.

Sources said technical and financial teams of KRL had held talks with the OGDCL technical evaluation team on Thursday and Friday last week to finalise the deal on the Uch-II project.

After these discussions, OGDCL agreed to award the engineering contract to KRL at $186 million, which matched the bid submitted by Petrosin but the company was disqualified after its partner backed out of the consortium, sources said.

However, a controversy may erupt after the award of the contract to KRL, which has no past experience of engineering, procurement and construction work. KRL provides consultancy services only. In this case, sources pointed out, KRL would be forced to award sub-contracts to those groups which had massive influence in OGDCL affairs for the last many years.

Work on different OGDCL fields has been delayed due to tussle between powerful groups to get the multi-million-dollar contracts. KRL is working under the leadership of former employees of Enar, who are facing cases of financial embezzlement filed by the current management of Enar in the Federal Investigation Agency (FIA).

Earlier, the OGDCL board had cancelled the tender for the engineering contract for Uch-II field and desired to implement the project itself. The tender was cancelled after the lowest bidder Petrosin’s partner China Lianoning International Economic and Technical Co-operation Group Corporation cancelled the agreement. The board had directed that the contract should be awarded to a state-run organisation in a fair and transparent manner and all public procurement rules would be followed, an OGDCL official said.

Published in The Express Tribune, June 14th, 2011.


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