L&T favourite for PRP-8 Group B
L&T will likely win one part of ONGC's Pipeline Replacement Project-8 (PRP-8) off Mumbai even though it is the sole bidder and its price is higher than ONGC's budget.
When ONGC opened PRP-8 price bids on March 26 (2024), L&T's price for Group B of the project involving the replacement of 160-km subsea pipelines of different lengths and diameters was 27% higher than ONGC's budget of about $250m. L&T's only competitor, Nigeria's Westfield Energy Resources, was disqualified because it submitted a 'paper' bid bond instead of an electronic one as demanded by ONGC.
In Group A, which involves replacing 96-km subsea pipelines of different lengths and diameters, L&T's bid was 45% higher than ONGC's budget of about $100m. Here, Westfield didn't bid.
L&T might win the Group B assignment because ONGC has the right to award a contract if the price bid is up to 20% more than its budget. "L&T can more easily give a discount of up to 7% (in Group B) and bring its quote down to ONGC's price range," says a source.
He adds that ONGC held Group B price negotiations with L&T in the first week of April 2024. If L&T wins Group B, it must deploy two pipelaying barges, four Dynamically Positioned Diving Support Vessels (DPDSVs) and other support vessels.
As ONGC wants PRP-8 completed by May 2025, L&T would have had to deploy one pipelay barge, two DPDSVs and other support vessels if it had bid aggressively for Group A and won. Some say L&T didn't really want to win Group A but only bid out of courtesy to ONGC.
"Usually, one pipelay barge can lay a maximum 1.5-km/day pipeline," we hear. "Double the number of barges and vessels are needed for Group B compared to Group A."
ONGC received PRP-8 bids on January 22 (2024). In addition to pipeline replacements, ONGC wants some platforms modified.