Accenture wins BPCL crude hedging consultancy

Vol 7, PW 21 (14 Jan 04) Midstream & Downstream

Accenture has won Bharat Petroleums mandate to set up the refiners much delayed crude oil hedging and risk management desk.

The six-month contract was awarded in mid-December last year and is valued at about Rs5cr ($1m). Accenture scored maximum marks followed by PriceWaterhouseCoopers and McKinsey.

What isnt known is why BPCL awarded the job to Accenture without opening the financial bids. Accenture was selected purely on technical grounds, confirms a top BPCL source.

Once we were convinced that Accenture had the capability and experience to meet our requirement, we decided not to open the financial bids. BPCL shortlisted Accenture, PWC and McKinsey in October 2003 after discussions with 12 companies.

Yet industry experts remain unconvinced. Something is unexplained here, says a source from one of the losing companies.

All three of us made detailed presentations to BPCL. What was so special about Accenture that BPCL did not even open the price bids Counters the BPCL source: It isnt mandatory or binding upon us to open the financial bids.

According to him, Accenture was selected because of its experience in commodity risk management. Crude oil hedging is still a new concept for us, he said.

We dont want to repeat the mistakes made by Indian Oil. It does not make sense to reject a competent party for the sake of a few lakhs of Rupees.

Accenture will formulate a risk management strategy for BPCL, get requisite approvals from the Reserve Bank of India and also train BPCL personnel to take positions through futures contracts in volatile international oil markets. Accenture has until 30th June to implement its risk management mandate.

BPCL was the first of Indias state-owned refiners to import crude independent of Indian Oil when the government abolished IOCs monopoly as the sole canalising agency for crude imports into India.

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