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EPSE inks deal with SMEC for oil depot design

EPSE inks deal with SMEC for oil depot design

Companies complain on bid process

The Ethiopian Petroleum Supply Enterprise (EPSE) and SMEC International PTY Ltd on Wednesday signed an agreement for design, supervision and commissioning of a new state-of-the-art oil depot to be built in Dukem town, Oromia Regional State.

SMEC won the tender put up by EPSE for USD 7.7 million. Six companies participated in the international bid floated in November 2017.

CEO of EPSE Tadesse Hailemariam and country manager of SMEC International Fikre Kebede signed the agreement. The design work will take ten months. The Australian company, SMEC, is engaged in road construction and agribusiness in Ethiopia.

Tadesse told The Reporter that EPSE is going to build the oil depot farm at an estimated cost of 150 USD million in Dukem town, 35km east of Addis Ababa. The enterprise acquired 10 hectares (10,000sq.m) of land from the Oromia Regional State.

According to Tadesse the new depot farm will have at least 12 oil tanks each having 20,000 cu,m of petroleum products. The oil terminal which will be the biggest in Ethiopia will have a total storage capacity of 240,000 cu.m (240 million liters) of petroleum products including gasoline, diesel and jet fuel. There are 13 oil depots in the country which in aggregate can store367,000cu.m (367 million liters) of petroleum products. So far EPSE did not build a jet fuel depot due to the sensitive nature of the product.  

“It will be fully automated and the depot will be linked to the new Ethio-Djibouti railway line,” Tadesse told The Reporter. The new oil depot site is only 300 m away from the railway line. TOTAL Ethiopia and NOC also have built fuel depots adjacent to EPSE’s site.

According to Tadesse, SMEC will undertake the engineering design work in the coming ten months. The new depot will have a modern and efficient unloading and loading facility and a state-of-the-art fire fighting system. “It will be environment friendly,” Tadesse said.

SMEC will prepare the bid document and conduct project supervision and commissioning work. The company will be paid USD 7,731,350 for the job. The project is estimated to cost USD 120-150 million.

EPSE will float an international tender to hire a contractor once the detail engineering design work is completed. The project will take three and half years. When the project is completed the country’s total oil storage capacity will increase to 607,000cu.m. The existing depots have the capacity to store 367,000cu.m of petroleum products which can cover the country’s fuel demand for 35 days. The new depot terminal will boost the total storage capacity to 607,000cu.m which will cover the country’s demand for 65 days.

When EPSE floated the tender to hire a consultant at end of last year 34 companies bought the bid document but only six firms participated in the bid. ILF Consulting Engineers, Abu Dhabi-based company, SAGA Global Consultants (India), SMEC International PTY (Australia), China Petroleum LONGWAY Engineering Management (China), Guangdong Quiyuan Building Design Institute (China) together with its local partner, Aspire Aecom Consulting Architects and Engineers and Ekium Group (France) have submitted their technical and financial offers to undertake the engineering, project management, site supervision, consultancy services for the construction and commissioning of a new white oil terminal at Dukem.

Only two consulting firms ILF, German company based in Abu Dhabi, and SMEC International passed the technical evaluation. According to EPSE, when the financial proposals were opened on April 16, 2018 ILF offered USD 10,900,000 and SMEC offered USD 7,731,350 plus 26,024,934.18 birr in local currency. “The bid is awarded to the least bidder, SMEC International,” the enterprise said.

However, two of the six bidding companies – ILF and SAGA – lodged their complaints on the bidding process. ILF claimed that it was the least bidder and it was not clear as to how the EPSE awarded the contract to SMEC.

Tadesse told The Reporter that originally IFL offered USD 10,900,000 while SMEC offered USD 10, 538,000 plus 26 million birr in local currency. “We found out that there was an arithmetic error in SMEC’s offer. We corrected the arithmetic error and requested the company if it concedes to the amendment and they have agreed,” the CEO said. “We have explained the situation to the representatives of ILF and they have accepted our explanation,” he added.
The second company that filed its complaint was SAGA. Representatives of SAGA requested explanation as to how it failed the technical evaluation. The company also claimed that the price the winning company offered was exaggerated citing that it could undertake the project with much lower cost.

Tadesse told The Reporter that EPSE did not open SAGA’s financial offer as the company did not qualify the technical evaluation. SAGA scored 66.31 percent in the technical evaluation while the passing mark was 70 percent. “Among other things SAGA did not present qualified personnel for the specific key job that we requested. They also did not have work experience in the same project that we are planning to undertake,” the CEO said.

Representatives of SAGA, who were not satisfied with the explanation, lodged their complaint to the board of EPSE. The enterprise submitted its written response to the board detailing why SAGA did not qualify the technical evaluation and its claim about the financial offer was not appropriate.

A source told The Reporter that the board was satisfied with the explanation given by the management of EPSE.

EPSE is the sole importer of petroleum products to the country and distribute the products through dozens of oil companies. The country’s annual fuel import which is growing at a rate of 10 percent has reached 3.8 million metric tons. The government spends more than USD three billion for the fuel import draining 80 percent of the country’s foreign currency.

EPSE has 13 fuel depots in 13 locations including Awash, Bahir Dar, Shashemene, Wolaita Sodo, Gambela, Nekemt, Agaro, Mekelle and Adigrat. With the capacity to store 130,000cu.m of fuel Awash depot is the biggest oil terminal in the country.