All tenders on hold as ONGC grapples with GST

Vol 20, PW 22 (27 Jul 17) People & Policy
     

ONGC is scrambling to work out how the Goods and Service Tax (GST) introduced on July 1 will impact a series of multi-million dollar tenders.

PETROWATCH learns all ONGC tenders are on hold until it sorts out the confusion over how to modify them to the new GST rules. On July 13, ONGC materials management division executive director Ashwini Nagia issued notice No.

32/2017 announcing the modification of tender terms and Bid Evaluation Criteria (BEC) "in view of the (new) GST rules." Nagia adds: "Until such time as the modified tender conditions and BEC rules are notified, all tenders are kept in abeyance." Expect ONGC to take up to four weeks before it gets its act together, say sources. One critical area of confusion is excise duty or tax.

"Under the previous tax regime excise was zero on items for E&P activity in ML and PEL areas," says a source. "Under the GST regime excise has been abolished.

But the earlier (excise) exemption for E&P activity has not been carried forward so engineering goods and items will attract 18% (GST) and this adds to project costs." Our source believes the only solution is for ONGC to lobby the GST council through the oil ministry to reinstate the excise exemption for E&P activity. Urgent clarity is also needed on the uncertain GST status of foreign companies without local affiliates as this might exclude them from ONGC tenders and reduce competition.