Court case could delay ONGC's B-22 platform project

Vol 11, PW 17 (10 Jan 08) Exploration & Production

Contractors bidding for ONGC’s EPC contracts are keenly following a case filed in the Mumbai High Court by Malaysian contractor Ramunia against its exclusion from the B-22 platform project offshore Mumbai.

When the case came before the court on January 4, it was postponed to (Friday) January 11, causing concern among contractors that a decision would not come in time for the April to September offshore construction season. “It looks like this project will be pushed to the next season,â€‌ says a worried contractor.

Ramunia, Naftogaz, Punj Loyd and Larsen & Toubro all bought tender documents to bid for the B-22 process platform and compressor module project. Punj Loyd and Naftogaz were disqualified, leaving Ramunia and L&T in the race.

Problems for Ramunia surfaced when it turned out that while Ramunia International Services had bought the tender documents, sister company Ramunia Fabricators had submitted the bid. Technically, this violated the tender conditions but ONGC asked for and received a MoU between both sister companies.

ONGC’s Executive Purchase Committee first said the Ramunia bid was in order but the company’s independent external monitors disagreed. Not wishing to go against its advisers, ONGC’s EPC backed down and rejected Ramunia’s bid, saying it did not meet the tender conditions.

Only L&T was left in the race. When its price bid was opened on December 22, L&T quoted $595m, against ONGC’s internal estimate of $620m.

Soon after, Ramunia wrote to ONGC saying its price would have been cheaper by $120m. ONGC called L&T in for price negotiations but nothing came out of these talks.

On ONGC’s request, L&T extended the validity of its price bid from December 31 to the end of this month. “The B-22 project was supposed to be ready by January 2009, within 13 months from date of award,â€‌ says a worried contractor.

“But with the court case it looks like the project will miss the present fair weather window in the western offshore and will be pushed to the next fair weather window.â€‌