Govt not to give priority to local suppliers for difficult oil fields
The government policy of state-owned oil firms giving preference to local firms for procuring goods and services will not apply to tenders for difficult oil and gas fields like those in deep sea.
The Cabinet Committee on Economic Affairs (CCEA) had earlier this month approved a five-year policy to give preference to goods and service providers who meet the local content targets and whose quoted price is within 10 per cent of the lowest valid price bid.
"The policy is not applicable for deep water/ high- pressure, high-temperature (HP-HT) operations for the time being," the policy notified by the oil ministry on April 25 said.
It provides for PSUs and their wholly-owned subsidiaries, joint ventures that have 51 per cent or more equity by one or more public sector enterprises, giving preference in award of a tender for supply of goods or service to a local company provided it matches the lowest price bid.
Also, the local company's bid should not be in more than 10 per cent variance of the lowest price bid.
The new policy is expected to encourage suppliers and service providers to progressively adopt 'Make in India' practices and add value to their goods and services within the country. The policy provides for PSUs taking penal action like blacklisting or imposing financial fines on companies that violate the local content provision.
"The manufacturers/ service providers having the capability of meeting/ exceeding the local content targets shall be eligible for 10 per cent purchase preference under the policy," the notification said adding preference can be given to such companies provided the quoted price is within 10 per cent of the lowest price.
A tender for procuring goods would specify that the contract for 50 per cent of the procured quantity would be awarded to the lowest techno-commercially qualified local content manufacturer/supplier. The remaining will be awarded to the lowest bidder.
The policy provides for a different levels of local content sourcing for different activities.
For upstream oil and gas production this ranges from 5 per cent (for fuel oil and lubricant sourcing) to 75 per cent for onshore logistics. The policy provides for level of local content to progressively increase till 2020-2022.
For midstream sector like pipelines and downstream activities like refining and retailing, the policy provides for giving preference to companies that can source 20 per cent of any service or supply contract locally. For EPC contracts this limit is 30 per cent.
"This policy shall not include goods/ services falling under micro small and medium enterprises (MSME) or domestically manufactured electronic products (DMEP) as those products/ services are already covered under specific policy," the notification said.
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