Presenter: Rahem Khan

Al-bario Engineering Pvt Ltd HCPC, Quetta Site

Definition:
For the smooth and safe operation of plant equipments we need to purchase / hire the parts and services from International / Foreign market and this is a general policy of WTO (World Trade Organization) and IPPPs (Independent Power Procedures Policies) that the contractor involve in any kind of EPC Contract binds him self to procure the installed package parts from OEM (Original Equipment Manufacturer) for a specific period of contract, these periods are named of YRW (Year Run Warranty) TQM (Total Quality Management (Parts Supplies & Services Clause) ) LTSA (Long Term Service Agreement) and some times the reasons of foreign purchases are to be of critical and sensitive parts non-availability in the local market or quality concerns and some others as per agreed contract.

Co-Operation Process Structure

Inter-Department

Project Owners (HCPC)

Suppliers Banks

Customs Officials
Clearing Agents International Transportation authorities

Procedures:
Requisitions (Initial Purchase Document with a specified data) Inquiries (Direct to OEM or OEMs International authorized agent)

Quotation (Prices in an International Currency with their companys standard terms and condition for the job like Ex-works, FOB, CIF and C&F)
SEE NEXT SLIDE FOR COMPLETE DETAIL OF INCO TERMS (SLIDE NO:05)

Purchase Order (A correct purchase order complying all with suppliers standard terms and condition) Payment Procedures (LC (Letter of Credit) or TT (Telegraphic Transfer) If the business comes with advance payment procedures, If not then after 30 days of invoice receipt as per buyers policy)

Consignment Delivery / Customs Clearances (Consignment need to be cleared for permanent installation or storage on facility from Govt customs house completing all the Pakistan Govt Import Trade Procedures)

Terms
EXW
FCA FAS

Description
Ex Work (Named Place)
Free Carrier (Named Place) Free Alongside Ship ( Named Port Of Shipment)

FOB
CFR CIF

Free On Board (Named Port Of Shipment)

Cost And Freight (Named Port Of Destination) Cost Insurance And Freight ( Named Port Of Destination)

CPT
CIP DAF

Carrier Paid To (Named Point Of Destination)

Carriage And Insurance Paid To (Named Point Of Destination) Delivered At Frontier (Named Point)

DES
DEQ DDU

Delivered Ex Ship (Named Port Of Destination)

Delivered Ex Quay Duty Paid (Named Port Of Destination) Delivered Duty Unpaid ( Named Point Of Destination)

DDP

Delivered Duty Paid (Named Point)

Equipments Gas Turbine S-Turbine Gas Comp Air Comp Demin Plant Generators DCS Systems Vibration System BSD HRSG All Others
TOTAL COST

Year 2001 (Rs) 4500000 10000 626000 15000 120000 5000 858000 00000 3000 00000 400000 6537000

Year 2002 (Rs) 16500000 7000 6000000 18000 480000 1500 133000 00000 10000 00000 450000 23599500

General Cost Center Statistics for Years 2001 -2002 (Parts for major equipments / systems)
Note: these prices are exclusive of any importation taxes or duties

Year 2001-2003 Cost for Foreign Purchase

(Equipment wise )
GT 18,000,000.00 16,000,000.00 14,000,000.00 12,000,000.00 10,000,000.00 8,000,000.00 6,000,000.00 4,000,000.00 2,000,000.00 0.00 -2,000,000.00 GC DCS ST Demin

Year 2001 Year 2002

Orders flow chart to the Countries for major orders (%)

USA Italy Singapore Mideast

USA = 30% Singapore = 70% - Italy = 40% - Mideast = 20%

Activity Risk
Assessment Risk War Risk Currency Risk

Transportation Risk
Legal Risk

Wrong Delivery Risk

Market Risk

Acceptance Risk

Indemnity Clauses

Environmental Risk

Insurance Risk

Damaged Delivery Risk

Direct Credit Financing Risk Quality Risk

Applicable Policy Risk

Quantity Risk

Warranty / Guarantee Risk