Conclusion by a Consortium composed of: Izostal S.A. (Consortium Leader), Ferrum S.A. (Consortium Partner) and Stalprofil S.A. (Consortium Partner) of the Agreement for the supply of insulated steel pipes DN700 to OGP Gaz-System S.A.

In reference to the current report No. 22/2021 of July 22, 2021, the Management Board of Stalprofil S.A. (Company) informs that the Consortium of companies (Contractor) composed of: Izostal S.A. (Consortium Leader), Ferrum S.A. (Consortium Partner) and Stalprofil S.A. (Consortium Partner) on November 23, 2021, concluded with OGP Gaz-System S.A. (Ordering Party), Agreement for the performance of the task entitled: "Delivery of insulated steel pipes for the needs of the Gustorzyn-Wronów and Dolna Odra gas pipeline, order no. 2", procedure number: ZP/2021/04/0046/PZ, Part no. 2.
The subject of the Agreement covers the delivery of externally insulated and internally painted steel pipes with a diameter of DN700 with a total length of approximately 37 km. The order will be processed from April 1, 2022 to August 31, 2022.
The contract value is PLN 51.1 million net, which is PLN 62.8 million gross.
The difference in the value of the offer submitted by the Consortium to the value of the concluded Agreement results from the provisions of the Agreement regarding the valorization and variability of purchase and production costs.
The participation of the parties to the Consortium in completing the Agreement will result from the actual involvement of Izostal S.A., Ferrum S.A. and Stalprofil S.A. respectively in individual stages of preparation and implementation of deliveries. As at the date of conclusion of the Agreement, the majority share of the Consortium Leader in the performance of the contract is estimated, however, taking into account the time perspective of the delivery, as well as the logistic requirements related to it, the involvement of the Consortium parties in the performance of the Agreement is not permanent and may be subject to change.
The contract provides for contractual penalties for OGP Gaz-System S.A.:
- for a delay not exceeding 30 days in the implementation of the Task - in the amount of 0.2% of the net remuneration for the performance of a specific part of the contract (Task), for each day of delay;
- for a delay exceeding 30 days in the implementation of the Task - in the amount of 0.3% of the net remuneration for the performance of a specific part of the contract (Task), for each day of delay exceeding 30 days;
- for delay in removing identified defects during the period of quality guarantee or warranty for defects - in the amount of 0.05% of the net remuneration for the Task (in the subject of which the defect occurred in the above-mentioned period) for each day of delay;
- for the Employer or the Contractor withdrawing from the Agreement for reasons attributable to the Contractor - in the amount of 20% of the total net contractual remuneration;
The parties agree that the total amount of contractual penalties charged to the Contractor is limited to 20% of the net remuneration of the Agreement.
If the reserved contractual penalties do not fully cover the damage suffered by the Ordering Party or if the cause of the damage is not included in the provisions on contractual penalties, the Ordering Party has the right to claim damages exceeding the amount of contractual penalties under the general principles of the Civil Code.
The subject of the Agreement is covered by a 36-month quality guarantee and a warranty for defects on the delivered goods. To ensure the proper performance of the Agreement, the Consortium will provide a performance bond in the amount of 5% of the Remuneration specified in the Agreement.
The remaining conditions of the Agreement do not differ from the standard terms and conditions applied in this type of agreement.
The Management Board of the Company considers the described agreement significant due to its value. The implementation of the aforementioned agreement will have an impact on the increase of the Company's revenues.