Afghanistan: Fuel Supplies at Bagram Diversified

Red Star Enterprises Ltd., the controversial ex-supplier of aviation fuel to the Manas Transit Center in Kyrgyzstan, has lost full control of a lucrative fuel contract at Bagram air base in Afghanistan.

The off-shore registered company, which was the subject of the US Congressional investigation in 2010, will be forced to share its Bagram contract with Asia Commerce Network (ACN), following a decision by the Defense Logistics Agency (DLA) to diversify supplies. ACN is a US-registered company whose core business is construction projects in Afghanistan.

“DLA decided to make multiple awards to ensure uninterrupted support to Bagram Air Base, provide resiliency in the supply chain and to enhance competition under future solicitations,” said Susan Lowe, a DLA spokeswoman.

The process for determining the new contract took almost two years to complete, a process that ACN’s business manager, Faron McFarland, described as “complex and demanding.” The value of Red Star’s share of the new contract is $688.4 million. ACN’s portion is worth $139.9 million, or approximately 20 percent over two years.

Red Star cornered the TS-1 jet fuel delivery contract at Bagram by building a proprietary pipeline. Previous competitors had been critical of DLA’s decision to continuously award the supply contract to Red Star, citing the fact that no tender had been issued to construct the supply pipeline. Red Star maintained it simply saw a business opportunity and took advantage of it.

Lowe said ACN will build its own delivery pipeline. “Under its contract, Asia Commerce will have six months to become fully operational. Once its facility is operational, the delivery requirements will be split between Red Star and Asia Commerce,” said Lowe.

The cost of building its own pipeline and storage facilities within the six-month timeframe is estimated at $6 million, McFarland, the ACN representative, told EurasiaNet.org. “We are currently working on it,” McFarland added.

McFarland said ACN could eventually be in a position to bid for an even larger share of the supply contract, saying “the incumbent always has an advantage.”