Dispute on Nashpa LPG plant touches new high

ISLAMABAD: As Prime Minister Imran Khan is set to leave today (Monday) for China with an aim to catalyse CPEC activities in the country, the OGDCL top management has detained Chinese experts in their camp at the Nashpa LPG plant site and deployed the security personnel around the camp taking the dispute to the new high.

After The News broke the story on October 5, 2019 with headline ‘LPG crisis looms as Chinese firm closes down Nashpa Plant’, the Chinese embassy became vibrant instantly and is also seriously looking at the development and is reported to have established contact with top mandarins at Petroleum Division to resolve the dispute between HBP and OGDCL.

The Chinese company, HBP closed down practically from September 26 the Nashpa gas processing and LPG recovery plant because of dispute on host of issues with OGDCL. This irritated the OGDCL top management to a level wherein it detained the Chinese experts in their camp at the site.

“Yes, I have restricted the movement of Chinese experts to their camp and they are not allowed to come out and more importantly I have deployed the security personnel around the camp ensuring they (Chinese experts) will not come out,” Dr Naseem Ahmad, acting Managing Director of OGDCL confirmed this while talking to The News.

“My engineers have succeeded in decoding all the operations by managing to have access to password and made the software of Distribution Control System of LPG plant operational and from tonight (Sunday night) we will start having LPG production from the plant,” he said and added now everything is under control at the site. However, spokesman for Chinese company HBP said the OGDCL engineer will fail 99.99 percent even they manage to decode and they will not be able to run the plant.

“Nashpa LPG Plant that produces 375 metric tons of LPG every day, is our national asset and we do not want anyone to stop its operation at any cost and to this effect, we kept on making the said Chinese company understand not to make it non-operational and instead set up 5-member committee to look into their issues, but after modification in the plant the Chinese company did on September 26, it was supposed to make it operational on September 30, but it coded all the operations of the plant putting the OGDCL in awkward position,” Mr Ahmed said.

“I have communicated to the head office of the said Chinese company in China that I want to handover directly to them the Chinese officials which are detained in their camp,” Mr Ahmad said.

The OGDCL top management, he said, has also decided to encash the performance guarantee of HBP amounting to $14.8 million and to this effect the process has been initiated. “Apart from it, we have also claimed Liquidity Damages (LDs) amounting to $14.8 million fom the Chinese company. We have remaining amount of $10 million of the company with OGDCL and its payment to the Chinese company depends upon its behavior,” he said.

Acting Managing Director without mincing the words also disclosed that the officials of local chapter of the said company met OGDCL secretary on Saturday and started repenting over its action to close down the LPG plant’s operation seeking middle way for the resolution of the dispute. “We have asked them to first submit the apology letter then OGDCL top management will decide the future course of action towards the resolution of the dispute,” Dr Naseem Ahmad said.

He said after modification, Chinese company was supposed to go for performance test of the plant on September 30 with 72 hours interrupted full scale running of the plant, but instead of making the plant operational, Chinese company closed down the plant. He also mentioned that earlier HBP failed for two times in conducting the performance test.

In the past, Dr Naseem Ahmad maintained, the said Chinese company as contractor had attempted to close down the plant for 4 times. “Earlier, through negotiations, we stopped the Chinese firm for three times from closing down the project, but for the fourth time it did not listen to OGDCL management and arbitrarily closed down the Nashpa LPG plant.”

However, spokesman for the Chinese company when contacted said the Chinese officials’ detainment at the camp site is not welcoming development rather it will add fuel to fire. He said that his company will not submit the apology letter. “However, we want the resolution of the dispute,” he said.

He said that Chinese embassy has also swung into action and will be in contactContinued from page 2 with top mandarins of the Petroleum Division. He further said prior to performance test, HBP wants the extension of time for eight days, which were committed on part of OGDCL and inclement weather and then it is ready to go for performance test.

The spokesman for HBP also said that it has issued legal notice to OGDCL asking to do some actions within 7 days after receipt of the notice that include, “Pay immediately over $100 million ($51.06 million because of breaches by OGDCL of its obligations under contract and $31 million as pending payments and $14.8 million in the head of Advance Bank Guarantee and $3.7 million as Advance Bank Guarantee for supplying of items). The notice also asked OGDCL to grant an extension of time for completion of project till October 31, 2019 and strictly comply with all its obligations under contract to ensure that no further delays are caused in the completion of the project and also asked OGDCL to issue the Performance Acceptance Certificate for the project. And in case OGDCL fails to do required things within 7 days after receipt of the notice, Chinese company will further proceed and cost of any proceeding and the risk of any consequences will be entirely on OGDCL account.