Leighton shadow hangs over pipeline tender

Vol 16, PW 16 (07 Mar 13) Exploration & Production

Speculation is mounting that ONGC is delaying its offshore Mumbai B-127 pipelines tender to avoid opening Leighton Welspun's price bid.

Why Because the Bombay High Court has yet to rule on a case brought by Leighton against ONGC over the unrelated offshore Mumbai Heera Redevelopment (HRP-II) tender. ONGC sent e-mails on February 28 to B-127 pipelines bidders Essar Projects, Leighton Welspun, Swiber, Punj Lloyd, Larsen & Toubro and Valentine Maritime asking them to extend their bid bonds till March 15.

“This is the third extension,” says a frustrated bidder. “Most likely, March 15 will also pass by without the price bids opened, jeopardising the project schedule.

Who knows if the project is still financially viable at today’s prices!” ONGC received bids on June 4 last year but completed technical evaluations only by September. "Then ONGC was pre-occupied with the HRP-II mess," adds another bidder.

"The validity of our bid bond was originally meant to end on December 31 but ONGC asked us to extend this." In the HRP-II project, Leighton was lowest bidder, closely followed by L&T.

But Leighton indicated zero service tax in its price bid, unlike L&T. When 12.36% service tax was added, L&T’s price was lowest pushing Leighton to second place.

Aggrieved, Leighton dragged ONGC to the Bombay High Court. “Leighton must have bid similarly (indicating zero service tax) in the B-127 pipelines project,” explains a source.

“ONGC does not want to open the B-127 price bids until the court gives its verdict on HRP-II.” ONGC wants to lay 114.5-km of pipeline between four upcoming unmanned well-head platforms at the B-127 marginal fields by May 2014 at an estimated cost of $229m.

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