Final hearing in SC on ONGC's $125 mn contract by May-end

The Supreme Court would start its final hearing in $125 million ONGC contract for laying offshore pipelines along country's west coast in the last week of May.

A Bench of justice VS Sirpurkar and justice TS Thakur directed to list the petition filed by Singapore-based offshore construction major Swiber's plea challenging the Bombay High Court order, which had set aside $125 million contract given to it by ONGC.

The apex court had on April 25 issued notices to ONGC and Punj Lloyd on Swiber's plea challenging High Court order and directed them to file replies within two weeks.

It has clarified that Swiber Offshore Construction could continue its work on the project that it started from March. The Singapore-based joint venture, however, would not claim any equity on the work done by it after the court verdict, the court said.

Swiber Offshore has contended that it is the most suitable bidder for the project.

ONGC had floated $125 million tender for laying a 116.5 km subsea pipeline off the western coast of India, which was awarded to the Singapore-based firm.

However, the decision was challenged by other bidders, including Punj Lloyd in the High Court. They contended that while awarding the tender, ONGC had ignored some benefits offered by them on price preference.

On April 6, 2010, the high court set aside ONGC's decision to award the contract to a consortium led by Swiber Offshore along with Sime Darby of Malaysia.

Major infra companies like L&T, Punj Lloyd and Leighton had also participated in the bidding.

Describing the manner of awarding the contract as "totally unacceptable and arbitrary" the High Court observed that the PSU had declined the price preference to Punj Lloyd merely on grounds of non-submission of a statutory auditor's certificate in the bid documents.

Swiber was the lowest bidder at $124.86 million, while Punj Lloyd had made a bid at $131.32 million.

As per the terms and conditions of the bid, Indian companies were to submit auditor's certificate along with their price bids in a specific folder in order to take advantage of price preference.

They were to be given 10% price advantage over foreign firms, provided they executed more than 50% of the project themselves.

Punj Lloyd had, however, submitted the bid in a separate folder, which resulted in its disqualification from availing price preference over the Swiber consortium.