ONGC blacklists Hind Geophysical for two years

Vol 15, PW 16 (23 Feb 12) Exploration & Production

India’s only offshore seismic contractor Hind Geophysical and parent company Hind Offshore launched legal proceedings in the Mumbai High Court on January 12 against an ONGC decision to ban them from its tenders for two years.

On February 21, Justices SA Bobde and RD Dhanuka postponed the next hearing till February 28 to allow Hind lawyers time to study court documents from ONGC. Mumbai-based Hind was put on ONGC’s ‘blacklist’ in January following a tender in which it bought a seismic survey ship from the state-owned explorer.

ONGC argues that Hind Offshore and its subsidiary, Hind Geophysical, colluded to rob it of a good price for the 1978-built Sagar Sandhani. When ONGC originally opened price bids in the tender to sell Sandhani on August 8 last year, it discovered Hind Geophysical was the highest bidder quoting Rs15.54cr ($3.1m).

Next came parent Hind Offshore, quoting Rs14.30cr ($2.86m), followed by Bombay Launch Service with Rs11.85cr ($2.36m), Stallion Offshore with Rs5.5cr ($1.1m), Star Impex with Rs3.65cr ($720,000), and Schokhi Industrials with Rs1.65cr ($320,000). ONGC was ready to sell the vessel to the highest bidder, Hind Geophysical, but the company suddenly pulled out claiming it was denied a bank loan to finance the purchase.

Because it withdrew, Hind had to forgo its security deposit of Rs25 lakh ($50,000). When fresh bids were invited on August 12 Hind Geophysical did not bid, but parent company Hind Offshore, the original second ranked bidder, did bid, maintaining its price of Rs14.30cr, leading to suspicions of a conspiracy to defraud ONGC of a higher price.

Hind Offshore eventually paid Rs14.30cr ($2.86m) for Sandhani and ONGC transferred ownership of the vessel last September. ONGC set up an enquiry panel and Hind explained its side of the story but was shocked to receive a letter in January saying it had been ‘blacklisted’ for two years from all ongoing and future tenders.