Prime Minister Yousaf Raza Gilani has tasked the Ministry of Petroleum and Natural Resources with seeking approval of the Economic Coordination Committee (ECC) for award of a $186 million engineering, procurement and construction contract for Uch-II gas field to state-run Kahuta Research Laboratories (KRL).
The project is expected to attract $500 million foreign investment as gas extracted from Uch-II field, located in Balochistan, will help generate 404 megawatts of electricity, which will mitigate energy crisis.
KRL is a subsidiary of Strategic Plans Division (SPD) which comes under the National Command Authority (NCA) and sources said this was the reason why the prime minister sought the ECC’s approval.
Sources told The Express Tribune that the petroleum ministry sent a summary to the ECC on Wednesday to get its approval for awarding the engineering contract to KRL.
Sources said that in a meeting held on Tuesday the board of directors of Oil and Gas Development Company Limited (OGDCL), the operator of the field, gave the go-ahead to the proposal of awarding the contract to KRL.
The contract for KRL is likely to deal a blow to the monopoly of powerful groups who wield considerable influence in the affairs of OGDCL and have caused substantial delay in development of oil and gas fields, sparking an energy crisis in the country.
Earlier, the petroleum ministry had approached the prime minister, seeking award of the contract to KRL.
The National Assembly Standing Committee on Petroleum and Natural Resources had also directed OGDCL to award the contract to strategic partner KRL in a bid to avoid exploitation by certain groups which had hijacked the company.
Petroleum Secretary Ijaz Chaudhry, commenting on the developments, said KRL would get the engineering contract at $186 million, which was the lowest bid in the tendering process.
Petrosin was originally the lowest bidder for the Uch-II field, but the tender was scrapped after the company’s partners backed out of the consortium formed for acquiring the contract.
The petroleum secretary said the Uch-II development project would made available gas for producing 400 megawatts of power and would attract $500 million foreign investment.
KRL fully capable
Expressing confidence in KRL’s capabilities, Chaudhry said it had implemented many projects in the past and was fully capable of implementing this project.
He also pointed out that Public Procurement Regulatory Authority (PPRA) rules also allowed award of contract to public-sector companies without any tender. Considering the security issues, he said, KRL would be in a better position to work on the project.
OGDCL has already signed a Gas Sales Agreement (GSA) with International Power for a 404-megawatt Uch-II power project. OGDCL has been working on Phase-I of Uch field and is supplying gas to Uch power plant which is producing 586 megawatts per day.
With the implementation of Phase-II, an additional 300 million cubic feet of gas per day will be produced from the field which will be utilised for producing 404 megawatts of electricity. Uch-II power plant is expected to be completed by 2013.
Published in The Express Tribune, June 17th, 2011.
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