Malaysia intervenes for Kencana in MHSRD-III

Vol 18, PW 20 (04 Jun 15) People & Policy

Three weeks after price bids were opened, Malaysian firm Kencana was awarded the LoA for ONGC’s offshore Mumbai MHSRD-III project on May 26.

But unconfirmed reports say it was only after the Malaysian government intervened to help fight off a challenge from L&T. In our last issue we reported L&T complained to the PMO about Kencana, citing among other reasons Narendra Modi’s much-hyped 'Make in India' policy and arguing that it should get preference as an Indian bidder.

But Malaysian authorities put pressure on their Indian counterparts, saying under Indian law lowest bidder Kencana was entitled to the LoA as the tender is global and no preference for Indian companies is in force. Kencana's parent SapuraKencana Petroleum holds considerable political clout in Malaysia through its majority-owner Shahril Shamsuddin, one of the country’s richest businessmen.

Before complaining to the PMO, L&T offered itself as a subcontractor to Kencana and was told this could be “explored.” But for now MHSRD-III is Kencana’s first stand-alone job for ONGC.

Yet work on a marine survey can begin only after October 15 when the monsoon ends. “This season is over,” reports a Kencana source.

“Nobody will issue towing permits (for survey vessels) before October 15.” Kencana is confident it can meet ONGC’s phased completion deadlines of May 2016 and May 2017.

“Kencana owns pipe-laying barges and construction yards,” adds a source. “It can easily complete work on time.