Boskalis $7.3m row with IOC over Paradip dredging

Vol 6, PW 3 (10 Apr 02) Midstream & Downstream

DUTCH DREDGING company Boskalis is unwilling to admit it publicly but we learn it is still smarting from the experience of working for Indian Oil.

Boskalis eagerly bid for a dredging contract at IOC's proposed Paradip refinery. It was the lowest bidder at Rs420cr ($87.5m) but IOC successfully managed to beat down the price to Rs399cr.

The contract was awarded in September 2000 and work began on schedule. So far so good.

Shocked Boskalis soon discovered IOC was deducting money from payments, causing losses worth Rs34.7cr. Boskalis even thought of stopping work but better sense prevailed and work continued to completion in July 2001.

Three crucial issues remained unresolved, compelling Boskalis to seek Shastri Bhawan's help. IOC deducted money owed to Boskalis because it used a fuel different from that specified in the tender and another kind of dredger.

Even though this saved IOC Rs11.2cr - and was accepted by IOC's consultants Engineers India - Boskalis accuses IOC oftaking a "narrow view" by penalising it. IOC also withheld Rs6cr ($1.25m) because of a two-week time overrun due to strikes, weather conditions and local Orissa government directives.

Boskalis says this is "unjust" and wants it dropped. Finally Boskalis insists it is not liable to pay the 'Works Contract Tax' as there is no transfer of property in dredging contracts.

But IOC has retained 4% of the money due for payment of the tax and kept half for itself.