When being Indian helps win ONGC tenders

Vol 14, PW 10 (04 Nov 10) Exploration & Production

Singapore’s Swiber must be feeling cheated.

PETROWATCH learns Swiber was set to walk away with a contract for ONGC’s B-193 subsea pipeline project offshore Mumbai, when Punj Lloyd dashed its hopes by demanding the 10% price preference promised to domestic bidders. When ONGC opened bids in Mumbai on October 25, Swiber was lowest quoting $124m, clearly aiming for a hat trick, as it has already won two other contracts under the composite B-193 project.

Abu Dhabi’s National Petroleum Construction Corporation (NPCC) was set to come second with a bid of $125m. But closer examination revealed its bid did not include service tax, as ONGC wanted.

With service tax added, NPCC slipped to third place behind fellow Abu Dhabi-based Valentine Maritime, which ranked second with $127m. Then Punj, trailing in fourth place with a $131m quote, sprang its surprise.

Under ONGC’s tender terms, if the lowest bidder is a foreign company, an Indian company can claim preference even if its own quote is up to 10% higher. However, the Indian company must then match its foreign rival’s quote to win the contract.

“ONGC will have to carry out a detailed examination to see if Punj really qualifies for price preference,” we hear. “They (Punj) are believed to have submitted certificates from a chartered accountant.

” But Swiber is unlikely to give up without a fight. “It would have been a different matter if a big player like L&T was claiming price preference,” we hear.

“But Swiber won’t give in to a company like Punj.” Whoever wins, ONGC is getting a good deal: its internal estimate put the project cost at $212m.

“All the bids fall within a narrow range so on that count there’s no complaint,” we are told. But ONGC could quickly get its wind knocked out if the loser takes it to court.