Date: Monday,16th Shabaan,1437 H; 23rd May 2016 G

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

Mr. Fares MohammedProjects ManagerSaudi Pan Kingdom – SAPACPO Box 85153Riyadh – 11691

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

Subject:

Ref: Reply to Eng. Ghanem’s e-mail

Dear Fares,

With reference to the above Project and Subject and the letters /e-mails referred as attachment, please be informed that, SAPAC have been notified by MODON that your submission of price SAR 15.00 for filling materials from borrow pits was rejected by MODON authorities. In this regard, SAPL have sent letter to SAPAC and informed verbally also.

Engineer Ganem (MODON) invited SAPAC management to MODON’s office for a meeting to discuss /to decide the price with their higher authorities. But unfortunately SAPAC did not attend and responded positively to the proposal.

MODON /SAPL is of the view that rejection of price does not mean to stop the work, only the price of SAR 15.00 for filling is rejected.

In principle, SAPL do agree that in the item of filling (material for filling brought from outside), there is a Variation Order exists, no dispute about it. Further, SAPL makes it clear to SAPAC that SAPL as a consultant are functioning as recommending authority only, Since you have worked with MODON for number of years you are quite well aware of it.

When MODON asked SAPAC to submit the price of SAR 17.00 for filling it is purely an effort to get the approval from their higher-ups, it does not mean an instant /automatic approval for the above price quoted by SAPAC.

SAPAC /SAPL recall the earlier discussion and understanding that SAPAC have agreed to work on this item continously without approval. SAPAC have not stopped / refused to carry out the work underlining the fact the price of this item is not yet approved. SAPAC have done it in the interest of work and progress. This positive attitude is being well appreciated by MODON/ SAPL.

As on date, until now, neither MODON nor SAPL have instructed you to stop the work of filling citing the reason of pending status of approval for Variation Order. Why you are stopping the work now !

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SAPL highlights / underlines the fact that MODON have rejected your price of SAR 15.00 for filling only, not your work / Quantity / your right to claim as Variation Order.

Engineer Ganem told SAPAC to submit another price. SAPL have advised SAPAC to continue the work, increase the progress by increasing the resources like equipments, manpower and maintenance.

Although SAPAC have not got the approval of Variation Order for filling since from the beginning, SAPAC have continued to work in the item of filling. Why you are stopping the work now !

In the last Client’s meeting, SAPAC have assured MODON / SAPL that they would continue the work, not stopping it and completes the project ahead of the Time Schedule stipulated in the Contract. Why you are stopping the work now !

SAPAC have been paid SAR 20, 775,786.34 through Advance Payment and four Invoices they have submitted. So far SAPAC have done the value of work at the site to the amount of approx. 12 Million only.The revised Contract with basic option which worked out to be SAR 21,428,453.92. From the above statistics, it is concluded and known that SAPAC have got already the entire revised Contract amount credited to their account. Why you are stopping the work now !

SAPL advises SAPAC to continue the work, already MODON have paid almost full amount. First finish the work as per the revised scope ahead of Contractual time frame and settle the price issue with MODON at later stage, knowing well SAPAC have already secured their full money. In the light of above these developments, there is no worthwhile reason for you to stop the work. Why you are stopping the work now !

SAPAC is well aware of the fact that they are already behind the revised Schedule, afflicted with many shortages, lack of machineries and maintenance problems Yours Sincerely,

Bassam MansourProject ManagerSaudi Arabian Parsons LimitedRabigh, KSA

Cc: Ghanem Al-Ghanem Hussain Al-Harbi Turki Al-Harbi

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