OGDCL intends to immediately start production from the stranded oil and gas fields to address the energy crisis of the country. OGDCL’s Board of Directors took a considered decision in the national interest and revised the evaluation criteria with the objective to select serious parties capable of expeditiously developing the fields instead of becoming hostage to non-serious and fly-by-night parties who could delay the mega project forcing OGDCL to end-up in paying much higher price of the project in the form of claims.
The evaluation criteria which has now been provided upfront in the tender documents in a transparent manner, is applicable to all the parties who are serious in development of the projects. In this regard the Public Procurement Regulatory Authority (PPRA) was also consulted to seek their advice in the matter, who, vide their letter No. F.1(11)/DD-I/PPRA/OGDCL/08 dated April 7 2008 have clearly indicated that the proposed criteria was not violative of the PPRA Rules. The relevant portion of the letter is quoted below;
“The ratio of weightage to technical proposal and financial proposal is not in conflict with Public Procurement Rules, 2004.. and there is no restriction/limitation on such weightage in Public Procurement Rules, 2004”
Such criteria are also applied by multinational companies and financial institutions such as the Asian Development Bank, World Bank etc. Moreover, OGDCL has used these criteria for the development of its projects in the past as well. It is further clarified that this criteria was meant for the projects of national importance having high cost where the country could not afford to hand-over such projects to non-serious parties.
The matter was discussed in the BOD meetings and no Board Member opposed the criteria in view of the broader interest of the country and keeping in view the fact that the projects remained undeveloped/delayed for quite some time.
However, some of the parties having vested interests try to create misunderstandings with intention to de-rail the process unless it suites their own interests.
It is further clarified that for expeditious development of the project, OGDCL’s Management has provided level playing field to all the genuine parties to participate in the forthcoming bidding round and win the bid on merit instead of using unfair means.
It is further clarified that there is no provision in the tender documents for outsourcing of LPG production to any private sector party. The LPG produced from these fields shall remain the property of OGDCL and the same shall be sold in a transparent manner in accordance with the sound business practices and having due regard to the national interest.
No other bidder has objected to the present evaluation criteria adopted by OGDCL except one. By adopting Quality and Cost Based Selection criteria, OGDCL has therefore, not violated any rules or regulations.
Rauf Klasra adds
OGDCL has not denied any of the key points made in the story published by The Express Tribune. In particular, the Tribune had given an example where this US$400 million project could be awarded at US$ 900 million under the new evaluation criteria set by OGDCL. This gives an edge to one bidder over another, after both have been declared technically qualified.
OGDCL has not also denied that in the history of the organisation, it has never used such a novel idea to evaluate bids.
Public Procurement Rules require the contract in a two stage bidding process to be first technically evaluated and then the lowest evaluated bid is to be accepted in the second stage.
At end of its clarification, OGDC is clearly making a confession that legal battle has already begun against this marking system. Aggrieved parties are also moving SECP against this new marking system.
MD OGDC Mr Naeem Malik was also grilled by the Senate body on Petroleum on Tuesday, where among others, Senator Haroon Khan warned him that this new controversial marking system would land OGDCL in the courts by litigants. The senator rejected justification of new system by using the cover of ADB and WB, saying level of corruption and non-transparency were much higher in countries like Pakistan than in ADB and WB. OGDCL itself confirmed in the meeting an instance where it had paid Rs17million to a lawyer in just one case.
OGDCL has justified its new evaluation criteria on the basis that it did not want to become hostage to unserious and fly-by-night parties to end up paying a higher price of the project in the form of claims. But a bidder that participates by providing US$1 million bid guarantee just to be able to participate in the tender and also obtained the 75% qualification marks in the technical round cannot be considered a non-serious fly-by-night company.
As to the claims, all claims are made in accordance with the terms mentioned in the tender documents., otherwise the claims are rejected.
The Board Resolution available with The Express Tribune does not state approval of the evaluation criteria specified by the OGDCL management and in fact told the management not to bring such evaluation criteria to the board in future.
With reference to the LPG component, our source in OGDCL had told us that LPG marketing rights would be given to private sector as security on the basis of OGDCL obtaining the financing for the development of this field.
This correspondent is in the possession of documents including minutes of Board meeting, legal notices followed by protest letters by multinational companies served on the OGDC management protesting this new marking system.
Published in The Express Tribune, December 23rd, 2010.
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