‘Govt to give priority to locally made goods in oil PSU tenders’

In a bid to give a fillip to domestic manufacturing, the Petroleum Ministry on Wednesday proposed to give preference to locally manufactured goods and services in the Rs 90,000-crore of tenders issued annually by oil PSUs. Under the Purchase Preference Policy, public sector oil firms like ONGC and GAIL will give preference to a firm supplying a minimum threshold of goods and services sourced from local manufacturing unit or plant, Oil Minister Dharmendra Pradhan said on Wednesday.

Accordingly, where the price quoted by a company, whether foreign or domestic, is within 10 per cent of the lowest bidder (L1) price, purchase preference may be granted to the said firm if it was willing to match the L1 price and supply the minimum threshold of locally sourced products and services.

In case the L1 itself is supplying the requisite locally sourced content, which will vary for different categories of product, the other bidders will not be asked to match the offer, he said. “Petroleum Ministry has calculated that annually Rs 80,000-90,000 crore of capex is invested every year by oil PSUs. We are trying to increase local content and sourcing of locally manufactured goods,” he added.

A consultation paper that details the level of locally sourced content for purchase of goods and services like pipelines, tubular casing etc has been floated. Comments have been sought in three weeks with a view to float a new policy by next fiscal, Pradhan said.

The policy has been thus framed that international competition is not reduced and the benefit of reduced cost of services arising from slump in oil prices is captured. “We will fix a certain percentage of goods and services that has to be sourced locally or from within India. These can be by way of purchase by the winning bidder, who can be an Indian company or a foreign company, from local units or by setting up manufacturing plants within the country,” he said. The new policy will give a fillip to domestic manufacturing and the ‘Make-in-India’ initiative.

In case the L1 bidder does not meet the criteria for local sourcing, the next highest bidder will be approached with the condition that he matches the L1 price and offer the requisite locally sourced services. In case the second lowest bidder or L2 doesn’t match, the L3 would be approached. “All tenders would be on competitive bidding basis,” he said, adding that local content in supply of pipes, for example, can go up to 50 per cent easily.