Date: Monday, 27th Rajab, 1437 H; 05nd May 2016 G

Ref no.: SAPL-LTR-TS0-0000XX

Mr. Fares Mohammed
Projects Manager
Saudi Pan Kingdom SAPAC
PO Box 85153
Riyadh 11691

Project: Development Project Phase 1 of the First Industrial City of Rabigh

Subject: Diesel shortage equipments shortage / breakdown lack of progress
Ref

: Break down details sheets attached for equipments, diesel shortage and letters SAPL-LTRTSO-000075 dated 26th April 2016 G & SAPL-LTR-TSO 000072 dated 24th April 2016

Dear Fares,

With reference to the above project, subject and the attachments as above, we have noticed in the past
couple of weeks during our daily inspection with utmost concern and regret that your equipments have
become idle due to shortage of diesel supply, suffer breakdown frequently owing to poor maintenance
problems. This has led to the major problem of stoppage of work intermittently / repeatedly, which
resulted in affecting the overall progress of the Contract work.
Time and again, several verbal reminders as well letters (copies attached) as we have written you many
times, pointing out the equipments that you have and are working presently are not enough to handle the
scope of the work. And if you add to that the dual acute problems of repeated breakdown of equipments
and diesel shortage, it compounds the situation and culminates in to much worse situation.
Despite several verbal reminders and letters which are attached as above, the situation at the site in
terms of overall progress for the Contract work has not been improved.
The only noticeable progress in the past couple of weeks was the laying of 750 tonnes of asphalt (BBC)
on 2nd May, 2016.
In this regard, SAPL (Mr. Bassam Mansour) wish to take up this matter of poor progress at the higher
level management of SAPAC in Riyadh along with MODON (Mr. Ghanem) and request to arrange a
meeting in Riyadh on a convenient date after consulting with Client.
Furthermore, we would like to remind you that you have been already paid 20,775, 786.34 (which
consist of advance payment and four Invoices) and your value of work so far done at the site is about 12
millions ONLY. Plus you have been given a defined & clear scope of work. Therefore you have no
excuse financially or otherwise for any more delays. As a matter of fact, the revised Contract value
stands as of now to an amount of SAR 21,392,966.56. It does mean almost SAPAC have been paid full
Contract amount.
If SAPAC had allowed their Subcontractor who has been at the site since September 2015 to work
continuously fulfilling the obligations due to them, SAPL is of the view that the current / revised scope
of work could have been completed well ahead in advance.
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SAPAC must see to it and make it sure that your equipments at the site are fully functional and enough
to the scope of work and address the problem of Diesel shortage. SAPAC is a big company with great
reputation and financially sound and should never let the site suffer from diesel shortage and long time
to repair the broken down equipments/machines. And this project / Rabigh 1 is continually bringing
you income and making money for you despite the severe current financial difficulties around us!
SAPAC is a well known company with huge resources and more importantly with a great
reputation & name in the Kingdom. We also know that you have much bigger projects & mega
projects with MOT and other clients, but SAPL wishes to stress the fact that, do not forget you
are a big & important contractor to MODON. Actually, we look at you as a partner with us to
help MODON succeed and achieve its goals.
Therefore, in the light above facts which cause serious concerns SAPL exercise the authority vested
under the Clause Article (38) of the Contract, namely the rate of progress do warn the Contractor in
writing so as to ensure work completion with in the period stipulated as per the revised Baseline
Schedule.
SAPAC is fully responsible for these delays and accountable for the consequences due to this frequent
breakdown of equipments, shortage of diesel and lack of resources
SAPL is of the opinion and arrived at a conclusion that as far as diesel, equipment shortages and
progress of the work issues are concerned this is the last letter as a Consultant would make as per
the above Contract Clause (38) mentioned.
If SAPAC delays the work completion and fails to fully hand over the specified dates as per the
the revised Baseline Schedule, the Contractor shall be liable to pay a fine for the delay period for
the completion of work after the date specified for the handing over (Refer to Clause Article (39)
delay fine).
In addition to the above, SAPAC shall bear the fees of the construction supervision during the
period for the which the Contractor will be subjected to the fine. (Refer to Clause Article (40)
Supervision cost due to delay)
.
This is for your information, record and prompt action at the earliest.

Yours Sincerely,

Bassam Mansour
Project Manager
Saudi Arabian Parsons Limited
Rabigh, KSA
Cc:

Ghanem Al-Ghanem
Hussain Al-Harbi

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Turki Al-Harbi

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