OGDCL encashes bid bond in Uch project

Our Correspondent
Saturday, Mar 18, 2023

ISLAMABAD: The Oil and Gas Development Company Limited (OGDCL) on Friday encashed Rs267 million bid bond of an engineering firm over its failure to deposit a performance bank guarantee in Uch gas field compression project.

The performance bank guarantee was 10 percent of the total cost of $82.3 million project.

“Yes, the guarantee has been encased and the amount of Rs267 million has been credited to our account,” OGDCL managing director Ahmad Hayat Lak confirmed to The News.

The engineering firm had won the contract of the OGDCL’s project for which it formed a joint venture with Sui Northern Gas Pipelines Limited (SNGPL). The firm had submitted the bid of Rs267 million in favour of OGDCL but it defaulted the performance guarantee, which was due to be paid 15 days back.

On March 3, 2023, the firm had encashed Sui Northern’s bid bond of Rs135 million over the gas company’s failure in paying Rs1 billion.

The rifts in the joint venture made OGDCL unhappy that wants to have the project completed on time.

“We cannot afford any delay in the completion and execution of the Uch gas field compression project,” spokesman of the country’s biggest exploration and production company said.

OGDCL management tried its best to put both the parties back on track but they didn’t show the required seriousness, according the spokesperson. “For OGDCL, time is money, and professionalism demands sticking to the timeline. The time has come to inculcate in public sector entities the culture of professionalism.”

“We have preserved the right to safeguard the interests of the company and OGDCL management would give one opportunity to both the firms to rescue the situation,” he added.

The spokesman further stated that top management would, however, finalise the way forward next week at any cost with the option to issue the re-tender for Uch gas field compression project to meet the timeline of the project.

The Uch gas field compression project is scheduled to complete by July-September 2024 under a gas sales agreement with the French company owning Uch power plant.

In case the project gets delayed, OGDCL’s reputation will not only be at stake but it will have to pay a penalty of $6,60,000 per day to the French company.

The flow of low BTU gas in the Uch gas field has gone down. To maintain the flow of the gas to Uch power plant with the required pressure, OGDCL had announced to initiate the Uch gas field compression project and floated the tender for the project.