MOL-an oil and gas exploration and production company-has set aside the Public Procurement Rules (PPRs) for grant of over $24 million contract by not advertising in the press for supply of seemless pipeline to the party picked up on selection basis for Manzalai field.
Sources said that MOL wants that the joint venture partners-OGDC, PPL, Pakistan Oilfields (POL) and Government Holdings (Pvt) Limited (GHPL)--should not stress for their recommendations to make sure that the right supplier/suppliers get the contract.
PPRs make it mandatory for advertising the contract in the press to ensure that procurement is done in a transparent and competitive manner. PPRs become more significant in a case in which public sector is involved. In Manzalai field 80 percent share goes to the public sector companies which are required to follow PPRs in letter and spirit.
In a letter to joint venture (JV) partners, MOL said: "For evaluation of bids for the supply of 3-layer PE coated linepipes for trunk line and flow lines, a workshop was held with JV partners on September 3, wherein the queries of the working interest owners were answered. The workshop on the operator''s request discounted price quotations and revised delivery conditions were received from four bidders and evaluated in the light of the recommendations.
''This was followed by seeking performance guarantee on the offered delivery schedules, which they accepted. Furthermore, the payment conditions were also negotiated and, as a result, Huffaz agreed to MOL''s payment terms whereas Tianjin required 30 percent advance payment against repayment guarantee and rest of the payments on shipping of the product.
The excluded Pipeline Supplies from the bid evaluation process being the reason that they are only the agent/supplier and not a pipeline manufacturer." The reason for the excuse indicated how specific MOL seems in accommodating Huffaz and Tianjin for grant of the contract.
It said "We may note here that this approach should not be used for future tenders (especially not at the stage of the bid evaluation) since the manufacturers may have exclusive agreements with regional representatives and agents, and in certain circumstances, the prices and delivery conditions of these agents can be better than we can achieve with the manufacturer directly."
The question arsis: what made MOL to exclude a supplier on the pretext that it was a supplier agent and not the manufacturers. Was manufacturing the prerequisite for the award of contract, and why Pepra rules were being followed for award of the contract?
Then it went on to say: "In this case, Pipeline Supplies'' revised offer is still cheaper than the next lowest bidder, Tianjin by $45,000. However, following the workshop recommendations and considering the disadvantage of splitting the supply between too many vendors besides keeping in view less attractive reference list of the mills offered by Pipeline Supplies, we recommend Huffaz and Tianjin for order placement."
It asked the partners to review the award recommendation and accord approval for awarding the line pipe supply order to Huffaz for 8" line pipe, and to Tianjin for 12" and 18" line pipes for a total PO and f o r value of $12,096,296 and 12,879,963, respectively.
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