DGH tells GSPC to stop favouring Engineers India

Vol 15, PW 16 (23 Feb 12) People & Policy

GSPC’s cosy relationship with Engineers India (EIL) could cost it dear, warns the DGH.

At the last Management Committee (MC) meeting of the Deen Dayal discovery block on January 17, DGH officials sharply criticised GSPC’s decision to award an EPC contract for the Mallavaram onshore gas processing facility to EIL in April 2010. Under scrutiny is GSPC’s decision to award the Rs1600cr ($320m) contract on a ‘nomination basis’, without a tender, a move the DGH and oil ministry says violates the PSC.

At the MC meeting, attended by then oil ministry director exploration Partha Sarathi Das, DGH officials told GSPC that the Rs1600cr spent on the contract is not ‘cost recoverable’. “A debt-laden company like GSPC cannot afford to be denied cost recovery of Rs1600cr,” says a source.

“It should have been more careful when awarding this contract!” By the last count, GSPC’s total debt burden stood at a staggering Rs13,863cr ($2.81bn). Within GSPC there is incredulity at several independent consultants on princely salaries of Rs8 lakh/month ($16,000) that gave top management bad advice.

“They convinced management to hire EIL by nomination,” he says. “But EIL has sub-contracted the work out to privately-owned companies.

” A senior EIL source confirms his company was hired for the Mallavaram project without a tender on a Lump Sum Turn Key basis. “We are also GSPC’s Project Management Consultant overseeing offshore platforms and other contracts (for the Deen Dayal gas discovery at KG-OSN-2001/3),” he said.

A GSPC spokesperson defends the decision to hire EIL. “We have our own benchmarks to determine EIL’s costs,” he said.

“Our management followed a thorough process before hiring them.” Asked about the ‘thorough process’, he declined to respond.

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