Cairn aircraft tender sends wrong market signals

Vol 16, PW 1 (26 Jul 12) People & Policy
     

Cairn India needs to work hard to regain its reputation as the customer of choice for service contractors.

Pipeline, rig and other service providers routinely and openly complain of Cairn’s obscure, ‘non-transparent’ and user (un)friendly tendering procedure that leaves it wide open to charges of cronyism and abuse by former employees with insider information. Aviation contracts are one such area.

This week (July 26) the Procurement Supply and Chain Management (PSCM) division of Cairn received bids for the hire of a single aircraft that can carry six to 16 passengers back and forth from Delhi to the Uttarlai military airbase near the company’s Rajasthan oilfields. The following companies, who submitted EoIs on April 29, are expected to bid: Chennai-based Swajas Air Charter, Air India and Bangalore-based Deccan Charter and RAHI (Regional Airports Holding International).

RAHI was set up by former Cairn employee Umesh Kumar Baveja on December 16, 2009; just months before he joined Cairn for a brief period in 2010 with the title Vice Chairman (Energy Developments). By pure coincidence Baveja is a friend of Cairn chief executive Rahul Dhir: both went to Delhi’s prestigious Indian Institute of Technology.

Until April 2010, Baveja and Dhir were also directors on the board of Singapore-incorporated Cairn Energy Developments, alongside Sundeep Bhandari, chairman of Cairn’s corporate advisory board. Hardly a crime, you might argue, or even relevant.

But it is certainly enough to get tongues wagging! Unlike ONGC, GAIL or other PSUs, where contractors are called together to a room to witness bids opened, at Cairn the decision is taken behind closed doors, in private. Losers are told nothing about why they lost, leading to suspicion and discontent among contractors.