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/07
(ii)
Following on from the completion of the Mechanical Installations is the necessity to test the piping
systems prior to insulation of the same. These activities alone would give a revised Date for
Completion of January 2007.
With specific reference to the manufacturing of the ducting, stacks, main steel structures and
secondary steel we would bring to your attention that all the fabrication items were completed
within the original time schedule. The delays incurred to the fabrication arise from late issue of
fabrication drawings, lack of sufficient details for hole details for fixing handrailing and gratings,
etc., together with late supply of Free Issue Materials. However, by increasing our resources we
were able to mitigate these delays and complete within the original time frame.
Nonetheless, due to the non-availability of civils foundations and the lack of storage areas on site,
we had to store the fabricated materials at our yard and within our workshops. This taking up
valuable space and denying us the ability to service other customers.
As and when foundations became available we did not delay in erecting whatever steel structures
we were able. However, this did lead to disrupted and out of sequence working.
Much of this information has been set out in our e-mail ref: PVM/C 462-2/090/06 dated 11 th May
2006.
Please note that we require compensation for extended preliminaries, running and overhead costs
for the above extended period of time for the Subcontract Works in accordance with Clause 3a of
the said General Purchase Conditions noted above, the details of which being submitted in due
course of time.
We would also bring to your attention our statement of account dated 15 th March 2006 [attached to
item (i) of the above referred letters] which clearly sets down those Invoice Nos. approved by
Messrs NEM site representatives, for example ref: C-462/MPS-12/267 and C-462/ADL-13/273
both dated 13th September 2006 [serial Nos. 23 and 24] and other Invoices [serial Nos. 27 to 46 up
to December 2006] which remain outstanding and unpaid at this time in contractual breach of
Clause 3b of the said General Purchase Conditions noted above and Section 2 Payment Terms,
pages 15 and 16 of the Subcontract Agreement referring.
The remedy for the above ongoing contractual breaches of the Subcontract Agreement are legal
damages for the interest / finance costs incurred at 12% per annum from the dates when the
payments became due in accordance with the relevant articles of the applicable Commercial Code
of Procedure in France, page 6 Governing Law and Disputes of the Subcontract Agreement
referring.
Details of our interest / finance costs will be submitted in due course.
We therefore consider that your Notice to With-Hold Payment and to Recover Liquidated Damages
is totally unfounded and a further breach of the Subcontract Agreement.
We formally give notice that should we not receive within the next seven days a substantial
payment in the amount of US$ 1,562,028.00 for our outstanding invoices and the awarding of a
further extension of time of 395 days as noted above, you will leave us no alternative but to
formally register a dispute with yourselves in accordance with Article 1 Commercial Conditions
Sub-Article Governing Laws and Disputes on page 6 and Clause 12 Applicable Law and
Disputes of Section 6 Appendix 1 of the Subcontract Agreement.
We look forward to your positive response in order to avoid possible arbitration and legal
procedures.
Yours faithfully
For and on behalf of
Petron Emirates Contracting and Manufacturing Co LLC
A. Bhattacharya
Director (Operations)
cc: Al Sharif Advocates Mr Jorg Seiffert
(or any other appropriate legal firm you wish to nominate)