19 global contractors GST-trained by ONGC for offshore engineering projects worth a billion dollars
Keeping with its dynamic approach, Oil and National Gas Corporation Limited (ONGC) pro-actively took up the cause of providing clarity on the vexed issues of newly introduced Goods and Sales Tax (GST) and its operative part. Offshore Engineering Services (OES) Mumbai successfully organised an Open Interactive session with Lump Sum Turn Key (LSTK) contractor of OES on GST on 20 July 2017 at 1st Floor, auditorium, 11 High, Mumbai.
The session was chaired by Executive Director, Chief of Engineering Services Mr. A. Ravi, and supported by Mr. P.K. Saxena, Group General Manager-Head Of Department, Mr. S.C. Pandey, Group General Manager –Head of Works (HOW), Mr. D.S. Sagar, Group General Manager (F&A) and General Manager (MM), Mr. B. Rajendran.
(Left) Houseful attendance of Business partners (Right) Session chaired by A Ravi, ED-COES
The need to take up this initiative surfaced when LSTK bidders expressed their concern about understanding of some of nuances of GST and their implications on the bid for these upcoming tenders worth over a billion dollars. As these tenders are directly related with enhancement and maintenance of oil and gas production from Western Offshore Fields, it was utmost important for OES to understand; the concern of these bidders and address them suitably. These projects are being monitored by The Ministry of Petroleum and Natural Gas on regular basis.
International bidders like NPCC of Abudhabi, Vietsopetro of Vietnam, Sapura, Kenccana , Malaysia ,CUEL of Thailand , Pt Timas of Indonesia; raised various queries on GST that helped to meet the tendering and completion schedule of the tenders.
OES Mumbai took this initiative and identified the clauses which have impacted the implementation of GST like Instruction to Bidders, General Conditions of Contract, Price Schedule, Milestone Formula. These were suitably modified and with active support from MM, Finance, Indirect taxation cell and Policy, they were finalised. Meanwhile, based on request of OES, Chief Corporate Finance engaged outside tax consultant for better understanding on the issues of interface of GST and Customs duty so that the bidders do not load the bid due to their unclear understanding on GST. All related clauses and clarifications are incorporated for the highest priority tender of OES, Mumbai i.e. Daman Transportation and installation tender and after incorporation of changes, bidders were to submit their bid.
During the session ONGC provided clarifications to the LSTK bidders related to execution of offshore construction project. Some of the interesting queries that were put up came from NPCC, where Abudhabi wanted to know whether 18% GST shall be applicable on LSTK. CUEL, Thailand enquired about any change in approval process for which ONGC clarified that it remained unchanged. LTHE raised the query on applicable rate for transportation which was clarified as 5% GST applicable. Also the information for GST portal for offshore registration that will open soon was disseminated.
The session was a huge success with clarity made available to OES while finalising the changes in bid which was provided to the bidders in Daman T&I tender. All thanks to the relentless support of Director (Offshore), Director(Onshore) and help extended by; ED-CCF, ED-Chief MM, Head Policy and Head Indirect taxation cell.
It sure was a revolutionary step to deal with the sea change in tax regime with introduction of GST.