L&T will win $138.59m contract at Mumbai High

Vol 7, PW 2 (09 Apr 03) Exploration & Production

LARSEN & TOUBRO is about to land a bonanza.

It is the only bidder left in the race for a huge ONGC contract. Any day now, ONGC will send L&T a letter of intent appointing it contractor for the '4 Well Platforms Project' - a contract ONGC thinks is worth $138.59m, part of the $1.1bn Mumbai High South Revamp that ONGC began in October 2001.

How did L&T come to be in this enviable position Tenders for the '4 Well Platforms Project' were floated in September 2002 after approval by ONGC's board. Hyundai Heavy Industries, Engineers India, Larsen & Toubro, Technip, J.

Ray McDermott, Mazagon Docks, Samsung and Clough Engineering all bought bid documents. ONGC held a pre-bid conference in October but only Engineers India, J.

Ray McDermott and L&T submitted bids. These were opened in January this year but J.

Ray McDermott's bid was "summarily rejected" by ONGC because it did not submit the bank guarantee and solvency certificate that are required documents for the price bid to be opened. As such its bid was found "commercially unacceptable.

As a state-owned company, Engineers India was entitled to preferential price considerations in such tenders but chose not to submit the chartered accountant's certificate that ONGC demanded as proofit would carry out value addition of at least 20% either in manufacturing or services if it won the contract. EIL refused to submit the certificate, saying this would "compromise the confidentiality of our prices." ONGC disagreed and decided not to award EIL 'purchase preference' for this contract and ultimately decided it wouldn't even open the EIL price bid.

Read on.