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

With reference to the current report No. 20/2022 of May 11, 2022, the Management Board of Stalprofil SA (the Company) informs that the Consortium of companies (Contractor) composed of: Izostal SA (Consortium Leader), Ferrum SA (Consortium Partner) and Stalprofil SA (Partner Consortium), on June 10, 2022, concluded an Agreement with the OGP Gaz-System SA (the Ordering Party) as a result of the procedure for awarding a contract in the form of an open tender for the supply of pipes for the needs of the project: Skoczów-Komorowice-Oświęcim-Tworzeń (procedure number: ZP/2022/01/0009/SWI).
The subject of the Agreement covers the supply of externally insulated and internally painted steel pipes with a diameter of DN700 with a total length of approximately 40 km. The order will be processed from January 1, 2023 to June 30, 2023.
The maximum value of the Agreement will not exceed the amount of PLN 94.3 million net, which is PLN 116.0 million gross. The indicated remuneration includes the remuneration for the delivery of pipes and the estimated remuneration related to the delivery tolerance of 0/+1% of the quantity of the ordered assortment, as well as remuneration to cover additional costs of possible transport to alternative places of pipe delivery.
The participation of the Consortium parties in the performance of the Agreement will result from the actual involvement of Izostal SA, Ferrum SA and Stalprofil SA, respectively, in the individual stages of preparation and delivery. 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 agreement provides for contractual penalties for OGP Gaz-System SA:
- for a delay not exceeding 30 days in the implementation of the Task (part of the subject of the contract) - in the amount of 0.2% of the net remuneration for the implementation of a given Task, for each day of delay;
- for a delay exceeding 30 days in the Task implementation - in the amount of 0.3% of the net remuneration for the implementation of a given 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 gross remuneration for the delivery of pipes specified in the Agreement.
The remaining terms 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.