Sairama is surprise winner in Assam revamp project

Vol 12, PW 7 (21 Aug 08) Exploration & Production

Little-known Hyderabad based company Sairama is the surprise lowest bidder for a slice of ONGC’s prestigious project to upgrade ageing oil production facilities in the northeastern state of Assam.

Sairama, we hear, was never believed to be a serious competitor to established names like Larsen & Toubro, Punj Lloyd and others in the race. PETROWATCH learns price bids for Group A (Lakwa and Lakhmani fields) of the Assam project were opened on August 12.

Sairama was the lowest bidder, quoting Rs2300cr ($575m), compared to ONGC’s internal estimate of Rs1900cr ($452m). Larsen & Toubro in alliance with Indian Oiltanking came second with a quote of Rs4800cr ($1.14bn) followed by Punj Lloyd with Rs5000cr ($1.19bn).

Price bids for Groups B (Geleki field) and C (Rudrasagar and Jorhat fields) were opened on August 14. Punj Lloyd was the lowest bidder, with Rs5400cr ($1.35bn) and Larsen & Toubro and Indian Oiltanking came second with Rs5800cr ($1.38bn).

Sairama’s bids for Groups B and C were not opened by ONGC, as the company’s financial capability was considered inadequate for additional bids beyond Group A. ONGC’s internal estimates for Groups B and C together were Rs2500cr ($595m).

Even though Sairama’s bid for Group A is beyond ONGC estimates, ONGC must award the contract to Sairama, as the bid evaluation criteria says that if more than two bids are received a Letter of Intent will be issued to the lowest bidder. “In such cases there can be no negotiations to bring down the price to match ONGC’s estimates,â€‌ says a contractor.

But for Groups B and C, ONGC will negotiate with Punj, as only two bids were opened. ONGC disqualified the Kalpataru and Oil India consortium as it “did not have a proven track recordâ€‌ for similar projects.

Kazakhstan-based KazStroy Services Oil and Gas was rejected, as documents were purchased by its Indian subsidiary but the bid submitted by the parent. ONGC wants work for Group A completed within 48 months and work for Groups B and C completed within 44 months of the LoIs.