Nashpa project: Delay in signing contract causes Rs8 billion loss

OGDCL has not signed a contract with successful bidders even after eight months.

Arif Rana July 01, 2014


The delay in awarding the multi-million dollar contract of the Nashpa project has caused a Rs8 billion loss to the national exchequer, besides undermining the government’s efforts of tapping oil and gas resources, officials told Express Investigation Cell (EIC).

An official document, a copy of which was made available to EIC, indicated that the Oil and Gas Development Company Limited (OGDCL) issued a letter of intent (LoI) for the development of the Nashpa field to TDE consortium in November last year.

Typically after anLoI is issued, OGDCL asks successful bidders to sign a contract within 10 days, but in Nashpa’s case, it has not signed a contract with TDE consortium even after eight months.

Officials said the delay indirectly favoursliquefied petroleum gas (LPG) mafias, as Nashpa field’s timely completion could add a supply of 375 metric tons of LPG to the open market.

Even the contract’s bidding process seems non-transparent. OGDCLviolated the rules by extending the delivery time from 14 to 19 months after opening the technical bids of parties. This apparently passed on an undue benefit of $15 million to the successful bidder, officials revealed.

The official document suggests that OGDCL is facilitating the consortiumwith illegal negotiations for months, which is tantamount to a violation of the Public Procurement Regulatory Authority (PPRA) rules. The PPRA rules prohibit state-run organisations, like OGDCL, to negotiate with any bidder once technical and financial bids are opened.

The violation of the rules has invited the attention of Transparency International Pakistan (TIP) in the case. TIP, according to officials, has accused OGDCL of causing a loss of billions of rupees to the national kitty due to the delay in signing the contract.

TIP chiefAdilGilani, while talking to EIC, said, “I wonder why the Pakistan Muslim League-Nawaz government is not looking into this to stop OGDCL from compromising national interests.”

ShaikhAzhar, a partner and local agent of TDE consortium, refused to comment. Separately, OGDCL’s acting managing director Mr Rafi said, “The organisation began negotiations with TDE consortium in national interest and I hope the contract will be signed soon.”

Published in The Express Tribune, July 1st, 2014.

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