OGDCL to lose billions by giving Kunnar project to LPG group
ISLAMABAD (October 27 2008): The Oil and Gas Development Company Limited (OGDCL) has dumped 12 bidding companies, most of them foreign, by holding back its tender for development of Kunnar Passaki Deep project. Some of the aggrieved parties include Hyundai, ABB, Descon Presson, Etimad, Petrosin, and Speciality Processing.
The OGDCL, a public sector exploration and production company, had floated international press tender for development of Kunnar Passaki development project. Interested parties were asked to submit their tender documents by 1200 hours on April 30, 2008.
Since it was a field development project, 12 reputed foreign and local companies purchased the tender documents. Later on, date for submission of bids was extended to July 21, 2008. On July 19, 2008, the bidders were informed, through fax and e-mail messages, that the company had postponed the bid submission date and they would be informed further shortly. The bulletin No 12 dated July 19 turned out to be a shocking news for the bidders. Although the OGDCL had promised the bidders to come back to them soon but, in fact, it had an entirely different scheme: it had decided to undertake development of Kunnar Passaki field with LPG plant, instead of working on the original plan of development this field with LPG plant.
The project was held back in connivance with SSGC, which has full backing of a strong Lahore-based LPG mafia.
According to the new plan, OGDCL would provide gas to SSGC, and LPG mafia would install LPG plant on its pipeline. By doing so, OGDCL would lose billions of rupees, and provide advantage to the LPG mafia. Chanda field's case is available in OGDCL records for ready reference wherein OGDCL had made 250 million rupees as signature bonus for sale of LPG. This did not include the money that the company would get from the sale of gas at the rate of Rs 48,000 per ton per day. The case of Kunnar Passaki development project, and other three fields of OGDCL, is of more importance than Chanda field, since these fields have more gas and its quality is better. They will produce 400 barrels natural gas liquid (NGL) and approximately 670 tons LPG per day. .By giving this project of installing LPG plant to SSGC, which is acting on behalf of the Lahore-based LPG mafia, OGDCL would lose Rs 6.7 billion just as signature bonus, and its loss in terms of NGL gas would be over Rs 1.2 billion per annum.
On average, the life time of these three fields is 20 to 30 years. Total loss that OGDCL would incur over the years for signing the agreement with SSGC and, in fact, with the LPG mafia, for installing LPG plant would be approximately Rs 100 billion.
One can not understand why, instead of installing LPG plants itself, the OGDCL is happily ready to give the benefit of 100 billion rupees to the SSGC-led LPG mafia.
Another question that arises is about OGDCL's generous attitude towards SSGC. It is also surprising why one public sector company is involving another public sector company for development of LGP. Does SSGC plan to install and operate LGP plant to be set up at Kunnar Passaki itself? The answer is in negative. Many in OGDCL believe that SSGC was acting for a local LPG mafia in respect of Kunnar Passaki LPG plant project.
They also believe that SSGC is actually working on behalf of LPG mafia, and the plan of offering the field for development, without LPG, is a conspiracy against OGDCL. Successful 'handling' of Kunnar Passaki will encourage SSGC and its likeminded mafia to try to deprive OGDCL of LPG asset available at Bobi and Sangoro gas fields.
The Kunnur Passaki field development case is being presented to OGDC board on October 27 for approval. The board should ask OGDCL why it is not carrying on the development of Kunnar Passaki field with LPG plant, to add billions of rupees to its revenue annually? It should also question OGDCL management why it is planning to give its rightful benefit, of billions of rupee to SSGC and its influential LPG mafia.
It may be recalled that OGDCL's pervious board had refused to endorse the proposal of giving development work of Kunnar Passski field to the LPG mafia.