Outrage as ONGC welcomes foreign bids in PRP-IV

Vol 18, PW 5 (23 Oct 14) Exploration & Production

Angry Indian bidders in ONGC’s offshore Mumbai $480m Pipeline Replacement-IV (PRP-IV) tender are outraged at the government’s decision to scrap the 30-year old protectionist ‘price preference’ policy.

On October 18 Indian bidders were shocked to receive a one-page letter from ONGC saying, “Clause 23.6 of Instructions to Bidders and BEC clause C-5 pertaining to ‘price preference’ stands deleted. Amendment to tender follows.

” Because it’s a major change to the tender terms, ONGC has extended the sale of tender documents from October 21 to October 28 and extended the bid deadline to November 4 with contract award slated for December 30 not December 15 as before. But there’s no change in the project completion schedule of May 15, 2016 for Phase-I and May 15, 2017 for Phase-II.

One bidder says the ‘price preference’ abolition contradicts Modi’s promise to boost Indian manufacturing with his ‘Make in India’ slogan. “There will be a net outflow of foreign exchange,” he says.

“Most ONGC global tenders will go to foreign companies.” Another bidder complains his company must now rework its price calculations.

“Price preference was the only advantage we had in ONGC tenders,” he adds. Another Indian bidder adds this removes the pressure on foreign companies to keep prices low when bidding in India or to partner Indian companies.