Energypac faces Tk34-crore penalty for delaying project

FT ONLINE

The Sylhet Gas Fields Ltd has penalized Energypac Tk34 crore for delaying the completion of a liquid-gas fractionation project by more than a year.

However, Energypac has challenged the penalty, alleging that the bureaucratic process and wrong handling by the Sylhet Gas authorities mainly caused the delay. 

On May 11, Energypac formally sought intervention from Sylhet Gas Fields' parent company Petrobangla.

Based on the complaint, Petrobangla formed a committee on May 28 and asked it to complete the investigation by 15 days. Petrobangla Director Rezaul Islam Khan is the convener of the committee. 

Six and a half months on, the committee is yet to submit a report in this regard.

Asked about the matter, Rezaul Islam Khan declined to make any comment.

The Rashidpur Condensate Fractionation plant went into operation on September 25, 2018. 

The plant fractionates condensate – low-density mixture of hydrocarbon liquids present as gaseous components in raw natural gas – from Chevron-run Bibiyana Gas Field into petrol, diesel, and kerosene. It has, thus far, produced 116 tonnes of petroleum products.

This is the fourth fractionation plant of the Sylhet Gas Fields Ltd. This plant can refine 4,000 barrels of condensate per day. The remaining three can together ­process 3,050 barrels a day.

The new plant will reduce the country's energy import cost by 2 percent. All the four plants of Sylhet Gas will save an import bill of Tk900 crore annually.

In July 2012, Sylhet Gas took up the Tk374-crore Rashidpur 4,000-Barrel Condensate Fractionation Plant project to refine condensate.

In April 2015, Sylhet Gas signed a contract with Energypac Engineering Ltd, a leading local company working in the energy and power sector, to implement the project.

Energypac was supposed to complete the project by March 2017, but it could not do so before September 2018.

The delay prompted Sylhet Gas to impose Tk34-crore liquidated damages on Energypac as per the contract. The amount – equivalent to 10 percent of the project cost – was deducted from the total budget.

However, Energypac in its letter to Petrobangla termed the damages demand irrational and illogical.

Energypac said it was the Sylhet Gas Fields authorities who had called meetings to decide on many matters of the project and thus caused the delay. 

Energypac also urged Petrobangla to conduct an investigation in this regard.

According to Energypac's letter to Petrobangla, most of the equipment used in the project needed to be imported, and for this, they required Sylhet Gas's approval. But, Sylhet Gas lingered the process, delaying the implementation of the project.

The contractor company also claimed that they had to do the same work twice though the work had been done perfectly the first time. 

"This is not an appropriate way to deal with a local company that has been working for the development of the sector. This will discourage other local companies," said Humayun Rashid, managing director of Energypac Power Generation Ltd.

Sylhet Gas, on the other hand, held Energypac entirely responsible for the delay.

"The project deadline was extended twice from the original schedule [March 2017]. Despite that, they [Energypac] were late by six months," said Rawnakul Islam, general manager of Sylhet Gas Fields.

Sylhet Gas Fields Ltd produced 150 tonnes of petroleum products from condensate in 2017-2018 fiscal year and sold them to the Bangladesh Petroleum Corporation.

The same year, the petroleum corporation spent Tk23,300 crore for buying 48.92 lakh tonnes of petrol, diesel and kerosene from local and foreign sources