Being a pioneer in localization with indigenous efforts, Oil and Natural Gas Corporation (ONGC) has taken a step forward to promote Aatmanirbhar Bharat by asking vendors to go local. During a webinar on Vendor Development for E&P Sector requirements – Vision of Aatmanirbhar Bharat, ONGC Directors and key executives showcased how ONGC is pursuing localization of equipment and tools at every location and exhorted Indian vendors to come up in fields where currently India is mostly dependent on import.
ONGC organized the webinar on Vendor Development for E&P Sector requirements – Vision of Aatmanirbhar Bharat on 19 August 2020, in association with KPMG – a multinational professional services network. The webinar was a part of ONGC’s larger vision of creating a robust ecosystem for E&P sector in the country. This vision is in line with the nation’s goals of achieving self-reliance across important sectors critical to the economic development of the country.
The webinar was participated by Director (T&FS) Mr O P Singh, Director (Onshore) Mr Anurag Sharma, ED-Chief Technical Services Mr R K Singh, ED-Chief Corporate MM Mr A P Tripathi, along with industry experts – MD Bharat Forge Mr Subodh Tandale, Country Manager Baker Hughes (BHGE) Mr Shashank Jha, GM Jindal Saw Limited Mr Avnish Kumar and Managing Director (Engineering & Construction) Petrofac Ltd Mr E Sathyanarayanan. More than 30 E&P vendor ecosystem companies, around 40 senior industry leaders and global MNCs and domestic champions also attended the webinar.
Encouraging vendor to focus more on localization, Director (T&FS) Mr O P Singh said, “Indian industry has the ability to locally manufacture items which are currently imported. ONGC will continue to play enabler in this localization, so that vision of self-reliant India is fulfilled.”
“Because of COVID situation there are challenges day in and day out, still we are pursuing the clarion call of Prime Minister to fast track indigenization. We are pursuing localization of our equipment or tool at our every location. Quality is very vital in indigenization and impact of low quality is significant,” added Director (T&FS).
Director (Onshore) Mr Anurag Sharma stated that India is the third largest importer of oil and gas and with time E&P efforts will go up. He highlighted that ONGC is pioneer in localization with indigenous efforts. “The Maharatna has played an important role in promoting Indigenization. We have achieved around 60 percent of indigenization but we want to become fully self-reliant. Various policies and measures like OaPL, DSF, small field, and national seismic program have been taken by the MoPNG Ministry. In next few years, the total goods market value will go up 11 billion USD.”
Addressing the suggestions given during the webinar, Director (Onshore) asserted, “Concern raised will be looked by us, however, we know most of it. We want to encourage our vendors for this Atmanirbhar Bharat to indigenization levels.”
Highlighting ONGC initiatives on localization and opportunities, ED-Chief Corporate MM Mr AP Tripathi shared the changes in procurement policy of ONGC:
- PPLC Policy - Under this policy, purchase preference of 10 percent is granted to LC - lowest techno commercially acceptable bidder.
- MSME Policy - In this, participating MSMEs within a price band of L1+15 percent is allowed to supply upto 25 percent of tendered quality subject to matching to L-1price. As per the procurement policy, 358 items are reserved for exclusive purchase from MSMEs.
- DMEP Policy - Purchase preference provided to DMEP subject to meeting value additions.
- GeM Policy - ONGC has made policy provisions for procurement items available on GeM. The total value of an order on GeM for FY 2020-21 is Rs 37 crores.
- Global Tenders Policy - Under this policy, the government has notified that global tenders will not be issued for procurement up till Rs 200 crores and ONGC will be implementing this policy.
- DMI&SP - Under this policy, ONGC provides a preference for domestically manufactured iron and steel products. However, exceptions have been sought in the case of 13CR casings.
Mr Tripathi underlined that 80 percent of the purchased done by ONGC is from indigenous vendors. Being the leader in localization, ONGC is the first to implement a purchase preference policy. To promote Make in India initiatives, ONGC is already placing development orders to new vendors.
Mr Tripathi informed that a five-year procurement plan available on ONGC corporate website (ONGCindia.com) is accessible to everyone, which keeps on updating on a timely basis. He further added that development order policy is under review to enable more and more vendors to benefit.
“For onshore, localization is high, however, in offshore, still significant quantity is imported. Around Rs 500 crores of mud chemical is bought every year. This can be reduced/finished, if Indian vendors come up in mud chemical field. Also, there are 135 items for which there is no Indian vendor. SRF, whose annual turnover in India is 100 crores, is imported. I would request Indian vendors to come up in these fields. This will be a good step towards Aatmanirbhar Bharat,” suggested Mr Tripathi.
He concluded by requesting all to go vocal for local. Prior to him, ED-Chief Technical Services Mr. RK Singh shared the technology spectrum of the E&P industry.
Giving insights of industry road map for localization of services and equipment, Country Manager BHGE Mr Shashank Jha shared that some countries like Saudi Arabia forces manufacturers to make equipment locally. There is no price matching. It is important to help commercialization in areas where a lot of investment is needed, so that model is considered in India. Another model that is completely knocked down (CKD) is importing manufactured parts and assembling them in India. API certification is another thing to consider. Further, up value chain manufacture locally by tying with technology partners, managing the intricacies of the commercial like BHEL. These models may possibly work in the next two-three years in India.
“Manufactures in India are smart, they only need some support and hand holding from companies like ONGC,” he said.
Managing Director (Engineering & Construction) Petrofac Ltd Mr E Sathyanarayanan said that procurement footprint by Indian compound in Petrofac has increased from six percent in 2016 to 11 percent in 2019. “A good opportunity exists for the local vendor if some support and relaxation is made by buyers like ONGC. Atamnirbhar Bharat is close to the hearts of vendors. ONGC can consider entering into performance-based contracts instead of meterage-rate contracts.”
The webinar witnessed a healthy and insightful discussion on the potential of localization in E&P sector and way forward for achieving the ONGC objective.