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ONGC Cancels Rig Tender Over 60% Price Surge, Collusion Fears

ONGC has cancelled a tender for hiring jack-up rigs due to serious concerns over pricing anomalies and potential collusive bidding. The state-run firm noted an unusually steep 60% rise in day rates within nine months, which it deemed beyond reasonable market behavior. The decision was made to safeguard organizational interests and ensure the prudent use of public funds, emphasizing transparency and fair competition. ONGC's shares responded positively, rising intraday on the NSE.

Key Points: ONGC Cancels Jack-Up Rig Tender on Pricing, Collusion Concerns

  • Tender cancelled over 60% price surge
  • Concerns over collusive bidding practices
  • Day rates jumped from $35,606 to $56,195
  • ONGC cites duty to protect public funds
  • Shares rose 0.68% intraday
2 min read

ONGC cancels jack-up rig tender citing pricing concerns

ONGC cancels tender after 60% price surge in rig day rates, citing possible collusive bidding and to protect public funds. Shares rise.

"Such an escalation was considered beyond reasonable and competitive market behaviour - ONGC"

New Delhi, April 22

State-run Oil and Natural Gas Corporation on Wednesday clarified that its decision to cancel a recent tender for hiring jack-up rigs was based on concerns over pricing anomalies and potential collusive bidding.

The clarification comes in response to a media report suggesting the cancellation of the tender.

The PSU firm said that it follows established public procurement principles, with a strong focus on transparency, fairness and promoting healthy competition.

It also added that all participants are expected to submit genuinely competitive bids, while any form of unfair trade practices, including predatory pricing or collusive bidding is discouraged.

The evaluation of the tender revealed an unusually steep rise of around 60 per cent in pricing levels, with day rates increasing from $35,606 to $56,195 within a span of about nine months, the company said.

Such an escalation was considered beyond reasonable and competitive market behaviour, ONGC said.

The Maharatna PSU also stated that the overall bid patterns and prevailing global conditions raised concerns over possible collusive practices.

"As a responsible public procurer, ONGC was duty-bound to examine these concerns, which ultimately led to the decision to cancel the tender," the company said.

ONGC reiterated that the move was aimed at safeguarding organisational interests, ensuring prudent use of public funds and maintaining the integrity of the procurement process. It added that the decision was based solely on pricing reasonableness, competitive integrity and adherence to procurement norms, without any external influence.

The company said it remains committed to transparent engagement with the industry and will continue to encourage fair and competitive participation, while taking necessary steps to prevent cartelisation and protect the sanctity of its procurement processes.

Shares of ONGC on Wednesday jumped as much as 0.68 per cent to hit an intraday high of Rs 285.05 on the NSE by 11:40 A.M.

- IANS

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Reader Comments

P
Priyanka N
Transparency is key for any government organization. While I support the cancellation, I hope this doesn't cause delays in our energy projects. We need domestic oil and gas production to reduce imports.
A
Aman W
Respectfully, I have to question this. ONGC has a history of slow decision-making. Cancelling tenders at the last minute can scare away genuine bidders too. They need a more robust system to filter bids early on.
S
Sarah B
Interesting to see the share price went up after this news. The market seems to approve of this tough stance against collusion. Good for investor confidence in the long run.
V
Vikram M
This is the right thing to do. If companies think they can form a cartel and loot a Maharatna PSU, they are mistaken. Hope ONGC blacklists the firms involved. Jai Hind!
K
Kriti O
The global supply chain is still recovering, so some price rise is expected. But 60% is too much. ONGC did its homework. Now they should quickly float a new, cleaner tender.

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