The total investment of the Second Western Pipeline is 142.2 billion yuan with the total length of 8,600 kilometers. The pipeline starts in the west from Horgos, Xinjiang to Guangzhou in the south, to Shanghai in the east, passing through 15 provinces, autonomous regions and municipalities including Xinjiang.
The project started in February 2008 and is expected to be completed by the end of 2011. The construction of the Second Western Pipeline is undertaken by Petro China Co. (hereinafter as Petro China) and the Project Management Office of Pipeline Construction of Petro China (hereinafter as the Project Management Office, Petro China) is the proprietor of the project and the Gas Pipeline Bureau of Petro China is in charge of the master contract.
The western section of the Second Western Pipeline (from Horgos, Xinjiang to Zhongwei, Ningxia and the connecting line from Zhongwei, Ningxia to Jingbian, Shaanxi) was completed and put into operation at the end of 2009. The audit found that the project had proceeded smoothly and the phased tasks of construction had been basically fulfilled.
The Second Western Pipeline is long, its construction difficult, its geographical conditions tough and its schedule tight. In order to improve the management of project construction, Petro China ad hoc set up the Leading Group for Second Western Pipeline Construction to accelerate the progress of project construction to realize the strategic goal of the central government for the Second Western Pipeline.
In the process, Petro China set big store by the organization and management of project construction, explored the new pattern of construction management innovation, continued to intensify the supervision and management over surveying and design, project construction, inspection, quality control, gradually set up and improved four-level quality control system, no-damage checking by a third party, quality, health, safety and environmental protection systems and monitoring and management system of risks which would damage and affect the management flow so as to continue to improve project quality and ensure the completion of the western section of the Second Western Pipeline at the end of 2009 as scheduled.
In compliance with the important directive of the Central Committee of the Communist Party of China and the State Council on accelerating the localization of equipment and materials , Petro China worked together with domestic iron and steel enterprises and conducted exchanges of information and technical research and development, in a short time, they successfully developed X80 hot-rolled steel coil and plate, pushing forward the localization of major equipment and materials.
At present, 91% of X80 steel pipes used in the trunk line of the Second Western Pipeline already is purchased at home and the localization rate of 900-pound high-pressure ball valves under 24 inches reached 98%. Meanwhile, the seven kinds of four categories of X80 high-grade steel series of tubes and pipes developed by the Petro China scientific research team have passed the appraisal of experts and filled numerous vacuums in this field in the country.
Among them continuous hot-rolling machine set, plate machine set and pipe-welding machine set are of the first rate in the world.
The western section of the Second Western Pipeline runs through the two provinces of Gansu and Shaanxi and the two autonomous regions of Xinjiang and Ningxia. The local governments and relevant departments along the pipeline set up a coordination group, convened numerous coordination meetings to deliberate on land requisition, demolition and resettlement, giving strong support in the planning and route selection, land requisition, demolition and resettlement and environmental protection.
The National Development and Reform Commission, the Ministry of Land and Resources and other ministries and commissions joined them in support of the construction of the project so that smooth work in land requisition, demolition and resettlement was ensured.
A. The management of bidding for some projects was not strict enough. By May 2009, construction contracts worth more than 3.6 billion yuan had been signed for natural gas pipeline, stations and sites of the Second Western Pipeline. The bidding for contracts worth more than 2.8 billion yuan was not standardized, representing 80% of the total.
One was to directly contract out, in contravention of the regulations, the project worth 101 million yuan. For example, the Project Management Office, Petro China, without bidding, directly contracted out the No. 1 Guozigou Tunnel, a crucial project of the Second Western Pipeline worth 77.19 million yuan, to Xinjiang Zhanyou Tianyuan Mechanization Construction Co. Ltd. which did not have the required qualifications.
That company did not take effective measures to cope with frequent geological disasters of the tunnel so that during the construction there were two avalanches and the work was thus suspended for 163 days, leading to about 20 million yuan of direct economic loss. Two was to artificially divide up bid sections and fixed bid winners in contravention of the regulations, making the bidding for projects worth 2.
7 billion yuan non-standardized or a mere formality. Among the 14 bid sections for the construction of the natural gas pipeline, construction units of three of them were already identified and their work had started even before the evaluation of the bids. Six bid sections were divided into 12 ones during the examination and sending of letters of acceptance so that there were six more bid winners.
The result of the bidding was that no matter the bidder ranked the first or the last in the evaluation of bids, every one won one to three bid sections for the construction of the project.
B. Problems of subcontracting in contravention of regulations existed in some projects. Random checking of the project of digging 2,721 kilometers of pipe trench found that by the end of June 2009, the construction unit of Petro China subtracted all its projects to other construction units and individual contractors and signed 397 subcontracts with each of them with each subcontract covering 6.
85 kilometers. North China Petro Construction Co. Ltd. of Hebei subcontracted the earth work of the project of Horgos Gas Compression Station it won (bid-winning cost being 240 million yuan) to 36 construction units including Xinrong Construction and Installment Co. Ltd. of Renqiu city, Hebei Province, raking in 102 million yuan of price difference, accounting for 42% of the contract value.
A. Inadequate early-stage preparations for projects and lax examination of the settlement of project cost failed to play the role of fully controlling investment. One was the belated approval of preliminary design. Work started in February 2008 for the western section of the Second Western Pipeline, but Petro China did not approve the preliminary design of the project until December 20, 2008.
By June 2009, with the exception of the Gas Compression Station, the estimates of preliminary designs and second-category cost of the other sites, stations and tunnels had not been approved. Two was that inaccurate preliminary designs and inadequate construction management led to over-calculation of 214 million yuan of investment.
For instance, the estimate of the cost for material storage of five transshipment stations including one in Ulumqi stood at 148 million yuan, but it required only 57 million yuan when calculated in accordance with the local standard, with 91 million yuan being over-calculated in the estimate. Three was that the project cost was not strictly examined and controlled, which resulted in the over-calculation of 61 million yuan of project cost.
For example, in April 2009 the Pipeline Bureau of Petro China directly contracted out an electricity supply project, in estimate of preliminary design, to the Xinjiang Electricity Design Institute. In fact, the actual length of electricity transmission line in the construction plan was 55 km less than that in the preliminary design, leading to the over-calculation of 26.
61 million yuan of project cost.
B. 1.274 billion yuan of cost, which should be reimbursed elsewhere, was included into the construction cost of the project. In order to enhance the capacity of shipment of equipment and materials of the railway, Petro China bought 3,000 freight cars and had paid 1.226 billion yuan of their cost by April 3, 2009 and all the cost was included in the construction cost of the Second Western Pipeline.
Moreover, Petro China entrusted its enterprise to research on the construction technologies and production capacity for high-grade steel, big-caliber pipes. By March 31, 2009, 48 million yuan of research cost had been paid and included in the construction cost of the Second Western Pipeline.
A. Construction in contravention of the regulations in the environmental protection zones. The western section of the Second Western Pipeline runs through numerous ecologically sensitive zones and water source protection zones in four provinces and autonomous regions including Xinjiang.
But some construction units proceeded with construction in violation of the rules bearing an adverse impact on the ecological environment of some areas. For instance, construction was conducted against the rules across four kilometers in two level-1 water source protection zones in Jiayuguan city, Gansu Province.
In crossing the Anxi State Nature Protection Zone of Extremely Drought Wilderness in Gansu Province, the Sailimu Lake State Scenic Spot in Xinjiang and East Tianshan Ecological Function Protection Zone in Hami, manual digging was not adopted as required by the rules, instead machinery digging applied and the width of digging broadened from the stipulated 20 meters to 26 to 30 meters, leading to the addition of 1.
1 million square meters in the acreage of destroyed vegetation.
B. Water and soil conservancy of the Second Western Pipeline lagged behind the construction of its main project. By the end of March 2009, the design of the construction plans of environmental protection and water and soil source protection measures of the western section of the Second Western Pipeline had not been completed, construction units not identified, work on most water conservancy projects not yet started and measures for restoring forest vegetation not in place.
The construction units were only urged to take some temporary protection measures and restore topography. As the protection measures were not carried out properly, 3.8 million square meters of surface in the construction sites of the project in Gansu was exposed to high wind and 1.07 million cubic meters of waste from construction was left on the two sides of the construction sites and temporary dumps and 45.
9163 million yuan of fees for restoration of forest vegetation collected by the relevant local governments remained idle.
The leading Party members group of Petro China attached great importance to the above problems found in the audit, convened three special meetings attended by the related departments and agencies to discuss and make arrangements for rectification. It drew up feasible work plans for rectification and urged various departments and units to have a clear focus on the issues, responsibilities, time frame and personnel arrangement involved, and to earnestly do a good job in rectification .
At the same time, proceeding from the work in improving the systems and standardizing operations, it intends to better enhance the management in future project construction and enhance construction capacity and raise management level.
With regard to the standardization of project investment and financial calculation in some projects, Petro China made more efforts in the drawing up and examination of the preliminary design, went through the formalities of examination and approval in a strict way, standardized financial calculation and enhanced the control of investment.
Meanwhile, Petro China was formulating measures for rectification and dealing with the problems of over-calculation of 214 million yuan of investment, over-calculation of 61 million yuan of project cost and the reimbursement of 1.274 billion yuan against the rules from the project cost.
Regarding the matter of environmental protection measures, which were not yet in place, Petro China, in compliance with the requirement of the Ministry of Environmental Protection, criticized the act of the regulation contravention by issuing an internal circular. While submitting the report on environmental impact, Petro China worked together with local governments concerned to adjust the work of protecting water source, making efforts to restore the destroyed vegetation as much as possible, improving the work plans for environmental protection and water and soil conservancy as well as accelerating the construction of water and soil conservancy projects.
