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.

Houseful attendance of Business partners Session chaired by A Ravi, ED-COES

(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.