Sui Northern Gas Pipeline Limited (SNGPL) has clarified that it does not use PEC documents and is covered by its own procurement procedure. Apropos a news item carried by Business Recorder on August 20, the SNGPL said that in cases where no price escalation clause existed, ie cost of fixed rate contract, the escalation clause would be deemed to have been incorporated.
It said the letter from Planning and Development Division (P&D) provided for giving price escalation for steel and steel products in case of contracts awarded on the basis of PEC bidding documents (approved by ECNEC) where the price escalation clause existed.
"The SNGPL does not award any fixed rate contract. All the purchase orders for steel line pipe awarded by the SNGPL to local pipe manufacturer are on firm and irrevocable price basis through open and competitive bidding", the company said. "In view of the above, the escalation in prices, approved by the ECC, does not apply on procurement processed by the SNGPL.
"While determining cut off date as January 01, 2004, the P&D has mentioned items such as pipes, sections, Gl sheet, copper and aluminium products such as cable etc. This clearly shows that the API pipe used for laying pipeline for gas transmission and distribution is not covered under this cut off date, rather it pertains to steel and steel products mainly used for civil construction activities," said the company.
The company clarified that in view of sharp increase in steel price, the SNGPL's board of directors decided independent of the ECC's decision, to allow for escalation in price of steel to local pipe manufacturer w.e.f. April 2005. As such, the cut off date of January 01, 2004 mentioned in the P&D letter was not applicable to the SNGPL.
It is also pertinent to mention here that the ECC approved price escalation to be paid for one time dispensation in case of fixed rate contracts, whereas the SNGPL has adopted a more flexible system to allow the pipe manufacturers for passing on any increase/decrease in the price of hot rolled coils (HRC) on the basis of Pakistan Steel rates, since April 2005. In view of above, the company is of the view that there is no ground for the pipe manufacturer namely M/s BBJ to protest for implementation of the ECC decision w.e.f. January 01, 2004.-PR