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e-Tendering: Mandatory for Oil PSUs

Ministry of Petroleum and Natural Gas has announced that all the OIL PSUs will have to implement e-Tendering for orders above a defined threshold.

Why e-tendering?

This announcement comes at a time when the industry has seen many projects getting stalled because of excessive delay in material supply, conflict of interest and claims. By making e-tendering a mandatory compliance, Ministry of Petroleum and Natural Gas wants to introduce transparency & accountability in the procurement process and fair and equitable treatment of bidders.

Why has government made it mandatory?

Merely publishing acts and policies don’t change the reality. There needs to be strict adherence and reinforcement to better the state of affairs. Hence the ministry has made it clear that it wants strict adherence by all the PSUs under its realm. For BPCL, IOCL and HPCL, any purchases above INR 5 lakh will have to be through e-tendering route. It is also suggested that this limit will be reduced to INR 2 lakh with effect from April 1, 2016.

How does it help the industry?

In e-tendering each process step is logged in a secure environment and can be audited whenever required in future.Transparency in the tendering process helps the industry buyers and suppliers in following ways

• It promotes competition within the industry which is essential for business environment

• It enhances the efficiency & economy

• It improves the public confidence

What are the challenges?

Oil PSUs need to identify and articulate the requirements in tender documents with clarity and precision for the vendors to understand and interpret it correctly. Though this might seem as a challenge, however, it is the most critical element in e-tendering success.At a time when there is a growing need for efficient & corruption free procurement process, it is certainly a welcome change and Ministry of Petroleum and Natural Gas seems to have pressed lever at just the right time.Ministry of Petroleum and Natural Gas has announced that all the OIL PSUs will have to implement e-Tendering for orders above a defined threshold.

 

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