Undermining the rulings of the Public Procurement Regulatory Authority (PPRA), the Oil and Gas Development Company (OGDC) awarded a multi-million dollar contract to a foreign company in a bid to purchase two oil drilling rigs.
Sources told The Express Tribune that OGDC stands in clear violation of PPRA rules by allowing RG Petro Group Co Limited China to change the price of the bid after opening a financial offer for supplying spare parts.
PPRA rules strictly bar procurement agencies, including OGDC, to allow any revision in the price after the opening of financial offers.
OGDC’s record shows it allowed an upward revision of $0.8 million in the total price of the bid for the purchase of spares, besides facilitating the successful bidder to replace some components of the rigs.
Furthermore, it also accepted a price of $27.5 million against a quoted price of $25.9 million, showing a difference of $1.6 million in the total bid price.
RG Petro quoted $25.9 million C&F (Cost and Freight) price in its performance invoice showing unit Cost C&F price by sea and total price by sea, but added $1.6 million as freight and insurance, taking the final price to $ 27.5 million.
The bidder allegedly made dubious entries in its performance invoice – while claiming that its price at the time of the bid opening was $25.9 million for C&F, it stated that another entry of $27.5 million was a mere typographical error. If any competitor quoted higher rates, the bidder could then claim Freight on Board (FOB) rates worth the extra $1.6 million.
The OGDC management, however, remained silent over this discrepancy and decided to go ahead with its original plan to award the contract to the controversial bidder.
SCM penalised
According to a case summary, a copy made available to The Express Tribune, OGDC’s Supply Chain Management (SCM) department raised the discrepancy issue and recommended a correction to protect national interest.
However, instead of straightening the error, the management penalised officials of the SCM department and transferred some of them to Oil and Gas Training Institute (OGTI) in Islamabad.
Second bidder’s reservations
Shandong Kerui Petroleum Limited cited a number of irregularities in its complaint filed with PPRA. The company said that it was shocked that OGDC has accepted a bid of RG Petro with a copy of the bank grantee which stands in violation of the rules.
The complainant said that RG Petro cannot qualify for the award of the contract as it sold only five deep drilling rigs against the tender requirement of 10.
It also added that as per the bid, OGDC intends to buy 2000 HP drilling rig with 585 tons of substructure and masts, and that RG Petro never produced rigs or masts in such a large capacity.
OGDC/RG Petro’s stance
OGDC Managing Director, Masood Siddiqi, said he could not comment on the issue as the process was still ongoing.
Owais Mir, the local agent of RG Petro, sent a message to The Express Tribune saying that the company has supplied a number of rigs to international and domestic markets.
It said there can be no discrepancies since they quoted a complete price breakup, separately for FOB and C&F prices, as per requirements of OGDCL tender documents.
Published in The Express Tribune, November 5th, 2012.
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