Procurement of liquid nitrogen and oxygen (IOCL Sample Clauses

Procurement of liquid nitrogen and oxygen (IOCL. IOCL and Air Liquide Industries, Belgium (ALB) entered (May 2007) into a contract for setting up oxygen and nitrogen plant on land leased to ALB within Naphtha Cracker Complex at Panipat. A license agreement for supply of oxygen and nitrogen was also entered (May 2007) between ALB and IOCL. Terms and conditions of contract inter alia stipulated that ALB was required to build, own and operate a plant capable of steady operation for at least 25 years for production and supply of gaseous oxygen and nitrogen to meet the quantity guaranteed to IOCL and market any surplus oxygen and nitrogen in the open market. After successful completion of construction of plant and distribution system, ALB assigned the scope of work to Air Liquid North India Private Limited (contractor). IOCL was under contractual obligation to supply power as per the requirement of oxygen and nitrogen plant. Accordingly the price payable by IOCL to contractor for off-take of oxygen and nitrogen during each billing period was arrived at after adjusting amount receivable by IOCL from contractor for the power supplied during the same period. Audit observed that: • As per the billing trend, IOCL could not recover even the cost of power as the cost of power was more than the cost of oxygen & nitrogen and an amount of ` 39.90 crore (as per Haryana State Electricity Board -HSEB power rate) was pending from contractor as on December 2014. Yet IOCL did not take any security for recovery of its outstanding dues. As per the amendment to bidding document, bidders were required to 1 To various contractors 2 Ranging between ` 11.98 / SCM and ` 23.50/SCM prepare their price bid considering the cost of power as ` 3.95 per unit (equivalent to HSEB power tariff). On the contrary, Article 8.3.1 of the contract states that rate of power to be charged by IOCL for supply of power to contractor is the cost of power generation of CPP which is higher than HSEB rates. This is disputed by contractor stating that ` 3.95 per unit was the base rate while bidding and is liable to pay power charges to IOCL as per HSEB rates only. Thus, entering into an agreement with contradictory clauses in bidding document and agreement entered into with Contractor resulted in doubtful recovery of dues and created uncertainty in ensuring supply of oxygen and nitrogen for functioning of the plant. Management stated (June 2015) that arbitration proceeding in this regard is in progress.
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Related to Procurement of liquid nitrogen and oxygen (IOCL

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