MUMBAI: Oil and Natural Gas Corporation (ONGC) will hold a pre-bid meeting on Wednesday with potential shipyards for constructing four Platform Supply Vessels (PSVs) through a global tender in the backdrop of a demand from local shipbuilders to amend the tender terms by giving them priority for the deal estimated worth over ₹1,000 crore.
ONGC’s move to float a global tender to finalise the contract for a vessel category that is well within the “capacity and capability” of small and medium Indian shipyards goes against the spirit of the ‘Make in India’ initiative, the Shipyards Association of India (SAI) said.
Urging the Oil Ministry to give “priority” to Indian shipyards in the tender, SAI alluded to the guidelines being framed by the Ministry of Ports, Shipping and Waterways for the revamped ‘Shipbuilding Financial Assistance’ scheme, wherein indigenous content of between 30-40 per cent would be stipulated to avail the state aid.
In a representation to Pankaj Jain, Secretary, Ministry of Petroleum and Natural Gas, the 19-member strong SAI has sought amendments to the tender terms per the office memorandum issued by the Ministry of Ports, Shipping and Waterways in 2019 on eligibility criteria for awarding shipbuilding contracts by government agencies, including public sector undertakings.
ONGC’s stand that cost savings can be achieved through global tendering is “misleading” considering the lifetime costs of acquisition, SAI stated.
“A minor increase in capital cost would be offset by the benefits of local production. Global tendering is therefore considered not aligned with the Atmanirbhar policy of the government and needs to be processed as domestic tender only for Indian yards,” it demanded.
SAI said it was in favour of incorporating the so-called ‘Right of First Refusal’ or RoFR in the tender documents as this will promote local shipbuilding by giving a competitive edge to local yards.
“By providing a level playing field, RoFR will encourage investment in the domestic shipbuilding industry and hence may be incorporated in the tender documents based on the criteria outlined in the 2019 office memorandum of the Ministry,” SAI observed.
Further, the shipyards group has sought easing of the earnest money deposit or EMD for micro, small and medium enterprise (MSME) yards as the tender stipulation of ₹8 crore would impose a huge burden and result in extra costs for these shipyards.
SAI described the performance bank guarantee of 10 per cent as “excessive” and wants it to be reduced to 3 per cent as otherwise it could lock up significant funds for MSMEs, restricting their cash flow and ability to raise working capital for other projects.
SAI said that the turnover criteria of ₹175 crore for the last two years set by the tender for bidders was “too high”. It has also opposed the tender clause that disallows technical collaboration, arguing that such tie-ups on design and capability enhancement would promote technology induction and flexibility.
It has also sought permission for consortium bids to pool the strengths of partners.
Hence, these aspects of the tender should be amended based on the office memorandum issued by the Ministry of Ports, Shipping and Waterways in 2019.
Interestingly, local yards have asked the government to ease the restriction on importing critical equipment for constructing the platform supply vessels from countries (read China) sharing land border with India keeping in mind the commercial interests of the customers.
While bidders will endeavour to avoid sourcing equipment from such countries “to the extent feasible”, this exemption could be allowed for a specific set of equipment collated by Indian yards and declared in their technical bids, including main propulsion equipment, auxiliary equipment, cranes and deck machinery as well as lifeboats and rescue boats with davits.
Further, SAI has sought extension of the time limit for delivery of qualifying ships for bidders from 10 to 15 years to facilitate viable yards that have been restructured to participate in the tender.
“By addressing these concerns, the tender can be made more inclusive and conducive for promoting the growth of Indian shipyards,” Sanjiv Walia, Chief executive Officer, SAI, wrote in the November 7 letter to MoPNG Secretary Jain.
Some 10 prospective bidders have shown interest in the tender.
During the pre-bid conference on Wednesday, ONGC will “address the queries of prospective bidders pertaining to technical and commercial criteria”.
ONGC has set a November 18 deadline for potential bidders to submit qualification papers, though officials indicated that this could be extended.
