After Swiber mess ONGC revises EPC bid rules
ONGC has introduced tighter financial criteria for EPC bidders in response to its damaging experience with Swiber.
ONGC's C-26, PRP-IV and Daman redevelopment projects off Mumbai were severely delayed after financially-distressed Swiber failed to execute them. Hopefully this will not happen again after ONGC's Delhi-based Policy Making Cell changed four main qualification criteria, confirmed in a notice from executive director Materials Management Ashwini Nagia on March 1.
Until now ONGC wanted bidders to have a positive net worth for just one year preceding the bid and an average turnover over two years equivalent to 30% of the annualised bid value. In future a bidder must have a net worth equal to at least 15% of the annualised bid value and an average turnover over two years equivalent to at least 50% of the annualised bid value.
ONGC has also introduced a new requirement that bidders must have working capital equal to 15% of the annualised bid value or provide a bank letter of credit. The third change is that bidders can no longer have a debt to equity ratio greater than 2:1.
Finally, ONGC is keen to weed out bids from dummy companies, set up in tax havens, who depend on parent company financial guarantees. In future the parent or 'supporting company', as ONGC terms it, must have at least 50% in the bidding company which must prove technical competence on its own.