OGDCL cancels multimillion dollar rig contract

ISLAMABAD: The top management of Oil and Gas Development Company Limited (OGDCL) has cancelled a multimillion dollar contract awarded to a Chinese rig company and decided to give an advisement in the national and international media for getting best bids for the rig.The contract was awarded under a negotiated tender clause negating the (PPRA) Public Procurement Regulatory Authority rules. The top management has also sent a letter, detailing facts, to the PPRA about the process for award of contract to the Chinese company seeking guidance in this particular case and future cases.The News in its April 11, 2019 edition published a story on the said wrongdoing under the headline ‘All is not well in OGDCL’ highlighting that in the country’s flagship exploration and production company the top management was involved in awarding $5,600,000 worth contract to a Chinese company- CNPC (Chuanqinq Drilling Engineering Company Ltd) for hiring rigs allegedly in breach of PPRA rules. And, the OGDCL had awarded approval in this regard in February 2019 through a limited or negotiated tender, which was not published in the international newspapers.The OGDCL had sent CNPC a limited tender for procurement of two (02) rental rigs and this tender was only sent to CNPC and Deutag Drilling, while approval was given to CNPC only and Deutag was declared technically disqualified.The PPRA Rule 42 (d) negotiated tendering clearly reads: “A procuring agency mayextreme urgency brought about by events unforeseeable by the procuring agency, the time limits laid down for open and limited bidding methods cannot be met. The circumstances invoked to justify extreme urgency must not be attributable to the procuring agency.”So, The News story turned true, as now under the new scenario, the OGDCL top mandarins have decided to do away with the said contract and decided to give an advertisement in national and international press seeking the interested parties for bids.OGDCL spokesman Ahmad Hayat Luk confirmed the development saying negotiated tendering mode was adopted in this case pursuant to Rule 42 (d) of Public Procurement Rules. One of the fundamental, Luck said, conditions was availability of rig by April 20 and it became the basis of technical disqualification of the bidder which was not able to confirm availability of rig within the given timeline. There was, however, difference of opinion internally on adopting this mode and matter was referred to PPRA for clarity. Since April 20th has already passed, therefore logically and legally the contract cannot be awarded on the basis of this tender. This is now a closed chapter.The PPRA’s opinion whenever received would be used for reference and guidance. The decision regarding any fresh tender would be taken in due course for which the Drilling Department will prepare the schedule considering their targets and availability of drilling points.Sources in the OGDCL say that the audit department returned the file to the Drilling Department with the following comments. Negotiated tender was wrong and the OGDCL should have done a press tender for this kind of purchase.The main clause of the tender was that the rig should be available to sped wells on 29th April 2019. Due to this clause, Duetag, a German company, was technically disqualified from this tender. Now that the due date of spud has passed, the audit department has asked the Drilling Department to press tender this demand again.SCM & legal department have written a letter to PPRA for their comments on this negotiated tender. PPRA reply on this issue is still awaited. Luk confirmed that the internal audit department had objected to the negotiated tender and suggested to give a presser tender for hiring the rig.Asked as to why the OGDCL wasted the time and created a situation qualifying to invoke the negotiated tendering mode clause, he said ideally experts in the entity should have pre-empted much before but in the same breath he defended saying that the contract took 8 months to get finalized as the internal departments under laid down procedure for procurement also took too much time.He argued saying when it comes to financial decisions, it is the Board of Directors of OGDCL that accords the approval and BoDs also takes the time as all the members want to get fully satisfied before taking any decision.However, in this case, he admitted, there are many lessons to be learnt and in future they will try to act according to the business plan. Asked whether the decision makers will fix those involved in such a shady deal that brought a bad name to the OGDCL, he said not at all as it will bar the officials of relevant departments from taking decisions.Asked why not all the relevant department were on one page before taking the decision of awarding the contract for hiring the rig under the negotiated tendering mode, as later on internal audit department objected to the said mode saying the decision was wrong and also suggested giving advisement on international and national dailies, he said when the decision was taken, it was not mandatory to have opinion from the audit department.

from The News International - Top Story http://bit.ly/2UURUt2