Pakistan Steel Mills (PSM) management is said to be planning to keep the Coke Oven Battery No 1(COB-1) on preservation mode for another four months due to non-availability of raw material, official sources told Business Recorder. Giving the background, the sources said that preheating of COB- 1 had commenced on December 1, 2010. It was ready for charging/commissioning on April 21, 2011, which, however, could not take place due to non-availability of required quantity of coal.
Keeping in view the entire situation, for safe preservation of reconstructed COB-1, M/s. Concord Industrial Project Limited, Ukraine, the contractor for reconstruction of the two batteries, were assigned the task of safe preservation of COB-1 for a period of eight months (22 Apr - 21 December 2011). Terms and conditions regarding this additional work, which was beyond the contractual obligations, were deliberated and finalised with M/s Concord by a committee constituted for the purpose.
The total cost of the services for eight months of COB-1 preservation was $0.8 million (inclusive of 15% withholding tax) at the rate of $100,000 per month. Subsequently, the services were acquired for a further two-month period from 22nd December 2011 to 21st February 2012 for an amount of USD 200,000 (inclusive of 15% withholding tax) at the rate of $100,000 per month. The total expenditure for preservation of COB-1 for the period from 22nd Apr 2011 to 21st February 2012, amounting to one million dollars, was covered under the 15% contingency amount of the contract.
In view of a continuing financial crisis faced by Pakistan Steel and the resultant non-availability of required quantity of coal for charging/commissioning of COB-1, it was required to be kept on preservation mode after the expiry of 8-month period on 21st December 2011. Consequently, after approvals of PSM Board of Directors on various occasions, the work of preservation of COB-1 was awarded to the Ukrainian contractor.
According to PSM management, due to non-stop financial crisis faced by Pakistan Steel, it is inevitable that the preservation of COB-1 is continued. Accordingly, a case is being submitted to the Board for its approval to continue with the services of M/s Concord, Ukraine, for preservation of COB-1 for a further period of four months ie from 22 Mar 2013 to 21 July 2013 on existing terms and conditions at the rate of $100,000 per month (inclusive of 15% withholding tax) at a total cost of $400,000.
The PSM Board, which is scheduled to meet on May 6, 2013 has been requested to approve that services of M/s Concord Industrial Project Limited, Ukraine, be acquired for a further period of 04 months w.e.f. 22 Mar 2013 to 21 Jul 2013 for preservation of COB -1 on existing terms and conditions at a total cost of $400,000, inclusive of 15% withholding tax.
According to the management, the first tender for restoration of two coke oven batteries was floated on May 15, 2005 for opening on June 30, 2005 which was extended to July 20, 2005, then to August 11, 2005, and further delayed to August 16, 2005 and finally opened on September 2, 2005 wherein an exorbitantly high price of $112.6 million on CFR basis was quoted by a single bidder. That tender was therefore scrapped.
Second time tender for critical repairs (reconstruction) of two batteries was floated on February 5, 2006 for opening on March 27, 2006 which was extended to April 18, 2006 and then to May 10, 2006. The contract was awarded on January 31, 2007 at a cost of $23.02 million.
The management further stated that two bidders namely M/s. Concord Industrial Projects, Ukraine, and M/s. Ukraine Industries Consortium, Ukraine, participated in the second tender. The management further clarified that no budgetary estimates could be prepared as the job was of a unique nature and was to be undertaken for the first time.
In reply to another question titled "who is responsible for delay in re-commissioning of the COBP, M/s. Concord or PSM?" the management stated that as per contract, the first battery (COB-2) was to be commissioned within 12 months which was extended to 20 months for completion of the additional unforeseen works revealed during dismantling. COB-2 was commissioned in October 2008. Second battery (COB-1) was to be commissioned within 10 months after handing over the battery to the contractors but the same was completed and was ready for charging. COB-1 is on hot preservation due to non-availability of coal for charging.