Uch Power Company has strongly protested to the Oil and Gas Development Company Limited (OGDCL) for not protecting the gas pipeline, saying that the company has expressly invoked all of its rights and remedies under the Gas Supply Agreement (GSA) and applicable law, official sources told Business Recorder.
Recently, the company's power plant at Dera Murad Jamali had suspended generation of electricity following damage to 18-inch diameter pipeline supplying gas to the power plant. Following the explosions, OGDCL wrote a letter to the company for a force majeure which the company refused to accept.
"Notwithstanding your procedural arguments with which we disagree, the fact remains that the incident does not constitute a force majeure because it was not beyond OGDCL's reasonable control," said Pervez Khan, Chief Executive of Uch Power, in a letter to the Managing Director, OGDCL. According to Uch Power, these two explosions took place on the 10th and 11th in number along the pipeline during the past nine years. Furthermore, as indicated in the pipeline layout on Google map, six other explosions have to-date occurred within five kilometers proximity of these two explosions.
Consequently, OGDCL knew for years that further explosions along the pipeline and even in this very area were likely, but OGDCL still did not take adequate steps to prevent these explosions. The inadequacy of the existing security arrangements was highlighted by the fact that one of these recent explosions took place within 200 meters from the nearest security check post, Mr Khan added. UPL has persistently been asking OGDCL to increase its security measures since the first pipeline explosion in November 2002.
"We have suggested, among other things, that OGDCL should employ more elaborate picketing and round the clock patrolling of the pipeline; 'box' the pipeline by installing fencing alongside the pipeline; establish a robust Security Control Room and set up its effective communication with security check posts; use 'real time' satellite imaging; have security personnel use vision aids at the security check posts and when patrolling; and install electronic surveillance equipment including but not limited to sensors on the pipeline and the fencing ," Khan maintained.
According to company which is operating 585 MW power plant there are also several other electronic and mechanical pipeline security measures currently available from specialist firms. Clearly, all physical security measures have to be backed up by well trained security personnel who can respond to potential threats in a timely manner, thus creating an effective deterrent.
"Nevertheless, OGDCL has not adopted any of these measures and, as a result, the explosions have continued. We sincerely hope that OGDCL now recognises the deficiency in its security arrangements and are pleased to learn that a study to improve them is currently underway, but these arrangements could and should have been improved years ago," Khan continued.
Uch Power Company believes that it is simply not credible for OGDCL to maintain that these recent explosions were beyond its reasonable control when it knew the likelihood of further explosions and it has known for years that there were specific additional steps it might have taken to increase the security of the pipeline.
"We also note that the economic losses to OGDCL as a result of these explosions are very significant. When weighed against these losses, the cost of the additional security measures would be minor and thus OGDCL should not be heard to complain that these explosions were beyond its reasonable control," he further added. The company said that without prejudice to its position with respect to the rejection of OGDCL's force majeure claim, it repeats that the downtime associated with the incident greatly exceeded the necessary time (by almost a factor of two) because OGDCL failed to examine the length of the pipeline at the outset. "In our view, OGDCL failed to use all reasonable efforts to mitigate the effects of the event in contravention of section 13.4 of the GSA and the company expressly reserves all its rights and remedies under the agreement," Mr Khan concluded.
Comments
Comments are closed.