ONGC argues with L&T over platform contract

Vol 7, PW 3 (23 Apr 03) Exploration & Production

LARSEN & TOUBRO is embroiled in a row with ONGC over a $147m contract to construct a 4-well platform on the Mumbai High.

Indecision at ONGC about whether to award the contract to L&T - the only company in the race - is at the heart of the problem. ONGC issued a Letter of Intent to L&T on 12th April (Saturday) - too late, according to L&T, which set a deadline of 7th April, "because that was the outer limit within which we could begin operations and have the project ready by ONGC's time-table." Worse, the LoI arrived at L&T's office after working hours and the company only saw it on 14th April (Monday).

"By then it was too late and we have now almost washed our hands off the contract," reveals a source. L&T is intrigued why ONGC took so long to issue the LoI when its price bid was opened on 11th March.

It's even more intrigued to know why ONGC's Executive Purchase Committee took no decision even though it met on three separate occasions after the price bid was opened. "Originally, the LoI was to be issued by ONGC on 30th January," we learn.

"This was postponed to 20th February, then to 14th March and then to 7th April." Finally, on 9th April, ONGC decided to issue the LoI on condition that L&T maintain the original completion schedule, but L&T refused. A source tells us ONGC's indecision has hit the 4-well platform schedule.

"Pre-project marine surveys take four to six weeks. We are now towards the end of April.

In early June the monsoons start and till September marine surveys are not possible. Commitments we had with yards for fabrication of the jackets no longer hold good."