Mixed results for HPCL with Vizag EPC tenders

Vol 21, PW 1 (05 Oct 17) Midstream & Downstream

Hindustan Petroleum has received mixed results in its EPC tenders to expand its Vizag refinery capacity from 8.33m t/y to 15m t/y.

Contracts are likely to be awarded soon for several packages but not for the Rs2000cr ($304m) EPCC-2 tender to set up a Full Conversion Hydrocracker Unit, which converts gas oil feedstock to high speed diesel and LPG. Here HPCL received a poor response with only Larsen & Toubro sending in an offer by the extended September 26 bid deadline.

When there is only one bid, government rules dictate that HPCL must invite offers again. Many expected Essar Projects, Samsung, Hyundai, Technip, Tecnimont, Cinda with CTCI, and Hualu Engineering & Technology to bid - but they didn't.

Some blame the weak response on HPCL's objectionable payment terms which will lead to insufficient cash flow for the contractor during the project. "Tender conditions are loaded against contractors so nobody wants to take risks," says a source.

Also off-putting was HPCL's insistence it must hold on to 10% of the contract value until it is satisfied with the project. Some say the lack of enthusiasm shown by contractors is because of their poor financial health amid the global downturn.

However the Vizag EPCC-4 package for a naphtha isomerisation unit using technology from UOP received a much better response by the extended September 12 deadline with bids from ThyssenKrupp Industrial Solutions, Tecnimont, Toyo Engineering and Technip.

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