Greatship furious with ONGC high-spec rig bias

Vol 18, PW 23 (16 Jul 15) Exploration & Production

ONGC's bizarre decision to support tiny companies in a tender for high-spec rigs has been challenged by Mumbai-based driller Greatship.

PETROWATCH learns Greatship complained to ONGC's Independent External Monitors on July 3 against the company's last minute change to a high-spec tender where it is now not only allowing micro and small enterprises (MSEs) to bid but giving them a 15% price preference. Following the complaint, ONGC has extended the bid deadline from July 9 to 23.

In its letter to the IEMs Greatship argues that the government's definition a 'micro' enterprise is one where investment in equipment is a maximum Rs10lakh ($16,000), while a small enterprise has investments of Rs10lakh-Rs2cr ($315,000). But the capital cost of a high specification rig is around Rs1000cr ($158m) and the monthly working capital requirement is Rs10cr ($1.6m).

More, ONGC wants bidders with three years rig operating experience, a turnover of more than 30% of the 'annualised' bid value and a positive net worth. "It is impossible for any bonafide MSE to meet these criteria," writes Greatship.

It is more likely, adds Greatship, that a MSE will be forced to structure itself as a 100% subsidiary of an "established drilling contractor with a large balance sheet" to get the price preference. Or a large company will create a MSE to get this benefit.

Either way this will abuse a government provision meant to benefit genuine MSEs.

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