Govt makes it easier to win oil and gas projects for local-content bidders

By: |
November 20, 2020 8:28 AM

“Class 1 local supplier”, or a supplier whose goods and services has 50% or more local content, will get purchase preferences for government procurements.

More than 8,000 oil and gas of projects CPSEs are currently underway, including refineries, exploration and production, pipelines, city gas distribution, drilling and survey activities.

At a time when the country’s oil and gas sector is executing projects worth about Rs 5.88 lakh crore, the Union government has amended the purchase-preference-local-content (PPLC) policy for the sector. In order to boost domestic manufacturing, the new policy allows bidders using local products to win contracts even if they quote rates 20% higher than the lowest bid. The purchase preference margin was earlier kept at 10%.

The policy will be applicable for all tenders issues by public sector oil and gas companies and their joint ventures.

“Class 1 local supplier”, or a supplier whose goods and services has 50% or more local content, will get purchase preferences for government procurements. For procurement of goods or services where there is sufficient local supply capacity, only Class 1 suppliers will be allowed to participate in the auctions, the amended policy note released by the ministry of petroleum and natural gas said.

The amended PPLC policy also states that if a foreign government does not allow any Indian supplier to participate in auctions in their country, the ministry may exclude bidders from that nation from taking part in auctions in India. More than 8,000 oil and gas of projects CPSEs are currently underway, including refineries, exploration and production, pipelines, city gas distribution, drilling and survey activities. Of the total anticipated cost of Rs 5.88 crore on these projects, Rs 1.2 lakh crore is targeted to be incurred as capital expenditure for FY21 itself.

Major oil and gas activities now under execution include HPCL’s Rs 43,129 crore Rajasthan refinery, HPCL’s Rs 26,264 crore Visakh refinery modernisation, HPCL-Mittal Energy’s Rs 22,900 crore polyaddition project and IOCL’s Rs 14,810 crore refinery capacity expansion project.

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