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ISLAMABAD: M/s General Electric (GE) has sought payment of all outstanding invoices by April 30, 2023 for uninterrupted services at Guddu site as several parts need repair.

M/s GE has sent two letters recently to all the concerned authorities in which it has cited reference of its letter of March 13, 2023 in relation to mandatory Spare Parts (Exhibit B) which are required to perform GT15 major inspection.

As per Contractual Service Agreement (CSA) Exhibit1, major inspection shall be carried out after completion of 32000 FFH from AGP upgrade. AGP upgrade for GT15 (TSN 299042) was performed in 2018, and since then unit has accumulated -35400 FFH.

Guddu power plant: GHCL seeks approval to buy equipment

The major inspection was due in September/ October 2022, and GE Engineering provided a special approval to operate the gas turbine for additional 3000 FFH (i.e., 55000 cumulative FFH since AGP upgrade). The limit of 3000 FFH was completed by March 23 2023, and major inspection for GT15 is required.

The contractor has further stated that unit-15 borescope inspection was carried out on April 8, 2023 and unit operation is not recommended by GE engineering to avoid its hot gas path parts failure as they have already accumulated 35,000 FFH.

According to GE, it sent multiple reminders to make necessary arrangements to perform outage since January 2022. However, mandatory spare parts are not available at site to perform major inspection (Ml) for GT15. Capital parts inventory status is as follows: (i) fuel nozzles- repairable;(ii) transition pieces – repairable; (iii) combustion liners- repairable; (iv) cap assembly set- repayable; (v) stage 1 bucket set- refurbishment required; (vi) stage 1 nozzle set –refurbishment required; and (vii) stage 2 nozzle set- scrap, not repairable.

As per CSA article 3.4, mandatory spare parts shall be for contractor’s use in the performance of its obligations under this Agreement and Contractor shall be relieved from any guaranteed performance commitments specified in Exhibit C to the extent directly impacted by the unavailability of mandatory spare parts. Contract Extract is as follows: “such AGP parts shall be contractor’s use in the performance of its obligation under the agreement and shall be considered as mandatory spare parts. Contractor shall be relieved from any guaranteed performance commitments specified in exhibit C to the extent directly impacted by the unavailability of such AGP parts at the facility after they have been supplied under the AGP supply and installation agreement of September 30, 2017.”

GE maintains that in view of contractual clause, it is evident that mandatory spare parts available at the site shall be for the use of contractor to meet its contractual obligations (i.e., covered maintenance, including major inspection).

“Now these mandatory spare parts are not available at the site, GE is relieved from its performance guaranties, and GE cannot perform the outage without availability of these parts,” GE’s Contract Performance Manager said, urging GPHCL to make necessary arrangements to complete mandatory spare parts set as per the Agreement.

Country Director, GE Gas Power, in his letter, explained that as per CSA Article 5, CPGCL shall make all payments within thirty days of receipt of each invoice from GE. CPGCL has to date not fulfilled its obligation under the Agreement to pay certain invoices and more than $ 9.6 million payments are outstanding at CPGCL account.

Further, as per CSA clause 5.9 late payment, owner (CPGCL) shall pay interest on all amounts not timely paid at a per annum rate equal to 6-months average ask side London Inter-Bank offered Rate (“LIBOR”), as published in the US Wall Street Journal on the immediately succeeding date of the due date of payment, plus two percent (2%).

M/s GE has maintained that as per CSA clause 4.3 Suspension Rights, if Owner (CPGCL) fails to fulfil any of the payment obligations of due amounts under this Agreement for more than sixty days, contractor may suspend performance and/ or the application of any Guaranteed Performance Commitments under this Agreement. CPGCL is to pay all outstanding invoices by April 30, 2023.

Copyright Business Recorder, 2023

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Tulukan Mairandi Apr 18, 2023 10:15am
Sure enough, anyone would get upfront payment from a bankrupt entity prior to rendering any services.
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