GTCL goes for 'forced' re-tender for 3rd time

Going against its tender evaluation committee and a project consultant, the Gas Transmission Company Ltd (GTCL) board headed by the Petrobangla chairman disqualified the lowest bid of a crucial $150 million gas compressor project.
The project is aimed at improving gas supply pressure and flow, sources said.
During the GTCL board meeting Saturday, which saw heated arguments for and against this disqualification, the board and GTCL chiefs made the decision saying that the government did not have enough fund to implement this project.
The board directed the GTCL to go for a third tender on this project and inform the project's financier Asian Development Bank (ADB) about this development. The first tender for this project was held in 2006.
The re-tender will cause several years of delay in installing the compressors. It also means that the existing gas consumers including power plants and industries in many areas will continue to suffer from unstable gas pressure affecting their productivity.
This decision also overturns a primary decision of the energy ministry made in March to go for the lowest bid of $150 million of Korean company Hyundai to install three compressors. However, as there was fund constraint, the ministry opined in favour of installing two compressors and stagger the three pipeline projects, giving GTCL some time to obtain more funds to complete the project in the near future.
At Saturday's meeting the board overruled all arguments saying that there was only $21 million available for the job although some board members strongly argued that the budget issue should be left to the government for decision.
The GTCL board late last month okayed two gas pipeline construction projects worth $72 million against an approved budget of $37 million. Both these pipelines are related to the gas compressor project under which three compressor stations were supposed to be installed at strategic points on the national gas grid.
Agreements for two pipeline projects signed last month were with Korean company Daewoo. These are a $26 million 51-kilometre (km) 30-inch pipeline from Monohardi-Elenga to Bangabandhu Bridge and a $46 million 87-km 30-inch pipeline from Hatikamrul near Bangabandhu Bridge to Bonpara of Bheramara.
In addition, there is another pipeline project in two parts. The first part is a 55-km 20-inch pipeline from Rajshahi to Bheramara and the second part is a 165-km 20-inch from Bheramara to Khulna with a total budget of $50 million. The tender for this project has not been opened yet.
Competent sources said without the compressors at Muchai, Ashuganj and Elenga, some important pipelines of the country will not be able to transmit enough gas at desired pressure, which will affect some future power projects.
In March, the GTCL argued in favour of the compressors saying that due to excessive demand, gas pressure was unacceptably dropping in the 24-hour cycle every day in important locations like Chittagong, Demra, Siddhirganj, Rupgan, Narayanganj, Munshiganj, Manikganj, Mymensingh, Baghabari etc. Power stations, fertiliser plants and industrial units are regularly being affected.
The new pipelines, aiming to connect the south-western region, would suffer the most as these are located far away from the main gas fields. "These will simply serve as a political show," quipped an official.
The pipeline and compressor project has been delayed by three years as the first 2006 tender for gas compressors had to be cancelled when an ADB investigation detected corruption in the bidding process.
The second tender was held in January 23, 2008 and closed on June last year in which four companies participated. ABB and Hyundai qualified technically and their financial offers were opened in February. But the lowest bidder Hyundai's offer turned out to be $150 million, about three times the allocated budget of $55 million. At Saturday's meeting some officials put this figure down to $21 million.
Hyundai's offer was, however, more than a $100 million lower than ABB's offer.
After the bids were opened, though there was no scope, the GTCL raised several points with the two bidders. ABB did not respond positively to these clarifications.
With Hyundai, the GTCL raised four points on price adjustment formula, design pressure of pressure vessels, block valves for future connection and senior orifice fittings.
Hyundai was asked to respond to these clarifications by April 20 but the company initially said these matters could be resolved during final negotiations, if the bid is declared responsive. As GTCL did not change its stance, Hyundai agreed on all four points in the way the GTCL wanted on May 5.
Meanwhile, there were some activities to divert funds or seek fresh loan from the ADB to implement the project as per Hyundai's estimate as this price reflects the present market situation and dismissing the tender was no solution.
On the other hand, some officials opposed the compressor project from the beginning, apparently fearing that this might affect the budget for the equally overpriced pipeline projects.
The GTCL's board meeting was supposed to decide on the tender at a meeting on May 7 headed by ex-Petrobangla chairman who was made Officer on Special Duty (OSD) last month. However on May 6 the meeting was hurriedly rescheduled for Saturday after renaming the chairman of the board as the current Petrobangla chairman.
During Saturday's meeting, an 11-member Tender Evaluation Committee submitted its report to the board. The committee declared ABB's bid as non-responsive.
On Hyundai's bid, the committee said, "…consider the bid proposal of Hyundai Engineering Company Ltd, Korea for further evaluation if the bidder can satisfactorily justify and comply with the issues enumerated at Enclosure-2 [the four points earlier raised by GTCL] within the quoted price and to seek re-confirmation/re-submission from HEC on those issues allowing five days time."
But some members of the board began with a negative note that this bid had to be cancelled because Hyundai did not submit bid clarifications by April 20. As some members raised opposition, the project's consultant was called in for his opinion. He strongly recommended accepting the bid saying that Hyundai eventually submitted the clarifications before the board meeting and this did not affect anything of the tender.
At this point, two senior officials started arguing that there was not enough fund for this project.
The board eventually decided that both the second stage bids be treated as non-responsive and the current bidding process be declared closed with intimation to all concerned; more realistic estimates be drawn for installation of compressor stations under a fresh bidding process to be initiated and steps be taken by GTCL for placing specific fund allocation proposal to the authorities.
The ADB offered a loan of $235 million to the government in 2006 for gas infrastructure and training. Of this fund, $189 million was given to the Gas Transmission Company Ltd (GTCL) for the compressor and three pipelines.
Keeping around $14 million as contingency budget from the $189 million fund, the GTCL held separate tenders for the pipeline and compressor projects.