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ONGC Found Flouting Norms by Refurbishing Old Cranes Instead of Replacing Them

ONGC has decided to refurbish as many as 21 cranes, 18 of which are over 20 years old, despite the cost of repairing each one coming close to that of a new crane.

Subhajit Sengupta | CNN-News18SubhajitSG

Updated:April 24, 2018, 4:59 PM IST
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ONGC Found Flouting Norms by Refurbishing Old Cranes Instead of Replacing Them
Image for representation only, (File photo/Reuters)
New Delhi: India's top energy company may have compromised the lives and safety of its employees and its actions may have resulted in the exchequer incurring losses, an investigative report by CNN-News18 has found.

Documents accessed by the television news channel revealed that Oil and Natural Gas Corporation of India (ONGC) has been flouting its own norms by refurbishing its old cranes, instead of replacing them.

According to the 'Maharatna' company's norms, the lifespan of a crane is 20 years, after which they have to be replaced. They should also be replaced if the price of refurbishment exceeds 75 percent of the cost price of a new crane.

However, ONGC has decided to refurbish as many as 21 cranes, 18 of which are over 20 years old, despite the cost of repairing each one coming close to that of a new crane.



The role of these cranes on offshore oil platforms cannot be over-emphasised. Because space becomes a vital constraint on these platforms, cranes are used to move containers between the work site and the storage area. Whether it is to bring in food, water or equipment, cranes play a vital role.

It all started on March 24, 2017, when ONGC invited tender for 27 cranes. Once the tender was invited, an anonymous written complaint was made by one Mujib Naithani, which said three deck cranes that were a part of the tender process were already recommended for replacement by the ONGC Executive Purchase Committee on October 17, 2008.

Paying heed to the complaint, ONGC decided to cut its requirement and invite tender for only 24 cranes, for which it issued a fresh tender November 9, 2017. Naithani, however, filed another complaint at this point, saying three more deck cranes that were a part of the tender process were already recommended for replacement by the ONGC Executive Purchase Committee on October 17, 2008. This led to the final tally of cranes being brought down to 21.

According to ONGC's 'Equipment Replacement Policy for Offshore Equipments', cranes must be replaced after 20 years, but they can also be replaced if the cost of repairs on any single occasion exceeds 75 percent of the replacement cost.

In a meeting in 2007, it was it was found out that out of the 45 cranes ONGC had, 28 cranes were already over 20 years old and 9 others were over 18. However, considering the lead time for availability of new cranes would be over three years, it was contemplated that the option of replacing the cranes may not be feasible, since revamping them would take lesser time and would add to their life by approximately 15 years.

On March 7 this year, the company invited tender for the refurbishment of 21 cranes, 18 of which are over 20 years old now. Of the 18, 11 are actually over 25 years old.

According to the documents available with CNN-News18, an Indian company called G&T Oilfield and Offshore Services had submitted a proposal to replace the cranes at a price of USD 870,000 apiece. The cost of repair for at least 10 of the cranes that are being refurbished exceeds 75 percent of the quoted amount. In some cases, it is almost as much as the price of a new crane.



The price quoted by the Sparrow group for refurbishment was between Rs 4.00 crore and Rs 5.60 crore apiece, depending on the capacity of the crane.

The contract to repair these 21 cranes was given to a company called Sparrows Offshore Group, which is a part of a service contractor group called Energy Cranes International (along with Aberdeen Hydraulics and Baricon Systems). ONGC had kept Energy Cranes out of its approved vendor list.

This raises several questions about the conduct of ONGC: Why has the company decided to break all its norms to award a contract for refurbishment? Is there a hint of a scam here? Why has ONGC kept mum on the detailed questionnaire sent by CNN-News18 for over two weeks?

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| Edited by: Bijaya Das
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