ONGC VIDESH LIMITED MATERIALS MANAGEMENT DEPARTMENT AGENDA q

ONGC VIDESH LIMITED MATERIALS MANAGEMENT DEPARTMENT

AGENDA q Introduction and Objectives q Policy formulation – ONGC Videsh q Procurement – Corporate office q Procurement – Overseas offices q Procurement – BD activities q Key Initiatives q Awareness to Procurement process q Conclusion

AGENDA q Introduction and Objectives q Policy formulation – ONGC Videsh q Procurement – Corporate office q Procurement – Overseas offices q Procurement – BD activities q Key Initiatives q Awareness to Procurement process q Conclusion

OBJECTIVES OF THIS PRESENTATION For understanding of business partners of ONGC Videsh. To use the Website as a platform for suggestions/feedback from business partners. Awareness for business partners regarding, Tendering process of ONGC Videsh; ONGC Videsh’s expectations from bidders and contractors; Elimination of common errors noticed in bids and during execution of Orders/Contracts. Familiarization of the business partners with key procurement initiatives, viz. Purchase through Ge. M (Government E-Marketplace); E-procurement. Implementation of MSME policy and procurement from MSME vendors.

PROCUREMENT ACTIVITIES IN A NUTSHELL CORPORATE OFFICE, DELHI • Procurement of Goods & Services for Corporate office, Delhi. • Engagement of Consultants for new overseas acquisition projects. • Back up support to overseas offices on need basis. • Procurement is broadly governed by parent company policy & guidelines. OVERSEAS OPERATED PROJECTS Conducted from respective Country/ Project Office Procurement of oilfield equipment, tools, machineries, spares and consumables and services for overseas operated projects. Procurement is governed by ONGC Videsh policies in tandem with host country policy guidelines and the underlined project agreements like PSC/CA/JOA etc. OVERSEAS NON OPERATED/ JV PROJECTS Procurement is conducted by the operator or JV Company. Procurement is governed by host country policy guidelines and the underlined project agreements like PSC/CA/JOA etc.

AGENDA q Introduction and Objectives q Policy formulation – ONGC Videsh q Procurement – Corporate office q Procurement – Overseas offices q Procurement – BD activities q Key Initiatives q Awareness to Procurement process q Conclusion

POLICY FORMULATION - ONGC VIDESH Procurement policy formulated & reviewed centrally; Standardised Tender/Contract Conditions and Evaluation Methodologies; Constantly reviewed for simplification and elimination of operational difficulties, transparency, equity and improvement of tender process and contract execution, based on: Directives from Govt. / Statutory Govt. agencies; Feedback from Vendors (Interactive Meet with Business Partners, Pre Bid Conferences); Internal feedback. Customized procedure in ONGC Videsh for specific business requirement: Procurement for Overseas Operated Projects; Hiring of Consultants for Business Development (acquisition of overseas oil & gas assets).

TENDERING CYCLE 12. Delivery, Payment and Post Contract Mgmt. 1. NIT / Tender publishing 2. Receipt of queries 11. Award of from bidders Contract 10. Price Bid Opening 9. Shortlisting of 3. Pre Bid meeting 4. Corrigendum (as per requirement) bidders 8. Clarifications (if any) from bidders 7. Technical Bid evaluation 5. Bid Submission 6. Technical Bid Opening

TENDER DOCUMENT Tender documents consist of: Instruction to Bidders (ITB) General Conditions of Contracts (GCC) Scope of work & Special conditions of contract Price format Bid Evaluation Criteria (BEC) Formulated prior to invitation of tender Forms part of Bidding document Contents of BEC Technical qualification /eligibility criteria Commercial criteria Financial Criteria (for tender value more than ₹ 10 Crores(annualized) for Services/LSTK and ₹ 25 Crores for Goods). Price evaluation criteria Bid Evaluation Offers evaluated strictly as per BEC and Tender conditions

AGENDA q Introduction and Objectives q Policy formulation – ONGC Videsh q Procurement – Corporate office q Procurement – Overseas offices q Procurement – BD activities q Key Initiatives q Awareness to Procurement process q Conclusion

PROCUREMENT – CORPORATE OFFICE Types of tender: Open Tender. Limited Tender. Single Tender: OEM/OES, Spares, Nomination/PAC basis. Board Purchase: To meet urgent requirement or where specifications are not firmed up. Type of Bidding: ‘Two Bid’ System: valuing above ₹ 5 Lakhs. ‘Single Bid’ System: valuing below ₹ 5 Lakhs Procurement Strategies: Goods & Services - Specific requirement / One time purchase. Annual Rate Contracts. Empanelment of Consultants.

12 GOODS AND SERVICES PROCURED FOR CORPORATE OFFICE GOODS SERVICES § G&G Hardware & Software § Consultancy Services § IT Equipment § Legal & Tax Services § Desktop/ Laptop § Housekeeping § Printer and Printer Consumables § Catering § Telephone Instruments/Mobile Phones § Logistics § Office Furniture § IT Related Services § Office Stationery § Air Conditioners § Maintenance Services § Security § Treasury related services § Foreign Exchange Service § Travel Related Services § Translation Services

AGENDA q Introduction and Objectives q Policy formulation – ONGC Videsh q Procurement – Corporate office q Procurement – Overseas offices q Procurement – BD activities q Key Initiatives q Awareness to Procurement process q Conclusion

PROCUREMENT AT OVERSEAS OPERATED PROJECTS Tenders are invited / finalized in respective countries; Tender conditions include of local/host country legal / tax guidelines; Generally, Limited / Open (valuing > USD 500, 000) Tenders are invited depending on tender value; In Limited Tenders, bidders are shortlisted based on Pre Qualification Criteria (PQC); Tenders / PQC is published on ONGC Videsh website for Limited/Open Tenders; In case of Limited Tender, request of the interested bidders is evaluated based on PQC and if qualified, tender is issued; Procedure for procurement for overseas requirement incorporating specific features like non-requirement of EMD, shorter bid validity (45 days) and tender turn around times etc.

AGENDA q Introduction and Objectives q Policy formulation – ONGC Videsh q Procurement – Corporate office q Procurement – Overseas offices q Procurement – BD activities q Key Initiatives q Awareness to Procurement process q Conclusion

16 HIRING OF CONSULTANTS FOR BUSINESS DEVELOPMENT Pursuing opportunity for acreage/acquisition of overseas Oil & Gas assets, requires engagement of external consultants (on need basis) as under: Technical Consultant Legal Consultant Financial Consultant (Merchant Bankers) Tax & Accounting Consultant Fast track and concise process for timely engagement of external consultants – window of opportunity is generally very small Separate procedure adopted for hiring of consultants with no requirement of EMD, SD. Limited tender is invited (through e-mail) from empanelled list of consultants Prices sought are as under: For Technical, Legal and Tax & Accounting Consultants Hourly rates for the professionals Cap on Fee Cap on OPE (Out of Pocket Expenses) For Financial Consultant Lumpsum success fee Cap on OPE

17 HIRING OF CONSULTANTS FOR BUSINESS DEVELOPMENT Basis of empanelment (current) of Consultants for BD opportunities Financial Consultants Top 12 merchant bankers as per the Bloomberg rankings based on value of Oil & Gas completed deals and having completed minimum 5 deals during the calendar year 2017; The list excludes 05 bankers/consultants (from the Top 12 rankings) who did not submit their bid in last three (3) consecutive occasions against the RFPs invited by ONGC Videsh and in their place, includes same number of merchant bankers meeting the criteria mentioned above. Legal Consultants International Law Firms in Band 1 list of Chambers & Partners and firms who have worked satisfactorily with ONGC Videsh during the past 5 years (and are also in Band 2 or Band 3 of Chambers & Partners); All Indian law firms in Band 1 in Chambers & Partners. Tax & Accounting Consultants Big Four consultants in the domain. Technical Consultants Through EOI exercise and based on present selection criteria like experience, personnel, regional dominance etc. List of empanelled ongcvidesh. com/tenders consultants available on ONGC Videsh website

AGENDA q Introduction and Objectives q Policy formulation – ONGC Videsh q Procurement – Corporate office q Procurement – Overseas offices q Procurement – BD activities q Key Initiatives q Awareness to Procurement process q Conclusion

KEY INITIATIVES New Territories (Avant-Garde): Procurement through Ge. M (Government E-Marketplace). E-procurement through Central Public Procurement Portal (CPPP). Implementation of MSME policy for procurement of Goods & Services (with special focus on procurement from SC/ST MSME vendors). Transparency and Vendor support: NIT/Tender documents available on ongcvidesh. com/tenders and eprocure. gov. in. Information on procurement through Single (Nomination) tenders available on ongcvidesh. com/tenders Integrity Pact (IP) (based on Transparency International) for tenders valuing above ₹ 1 Crore. Dispute Resolution Mechanisms viz. IEM, Conciliation, Arbitration etc. Opening of tenders in presence of bidders’ representatives. Periodic audits by external and internal agencies.

AGENDA q Introduction and Objectives q Policy formulation – ONGC Videsh q Procurement – Corporate office q Procurement – Overseas offices q Procurement – BD activities q Key Initiatives q Awareness to Procurement process q Conclusion

AWARENESS - PROCUREMENT PROCESS Cause of Common errors by the bidders Not meticulously following the instructions outlined in the tender document; Non participation in Pre-bid Conferences; Non serious approach while submission of offers leading to large number of clarifications. Common deficiencies in bids / offers / contracts Non-submission of Bid Bond (Bank Guarantee) in correct format and sometimes, not mentioning the Bid reference number in the BG; Non-filling / partial filling of Bid Matrix and various tender forms; Non-submission of copy of blank Price-bids with Technical bid. No tick marks provided against the price columns; Disclosing prices in Techno-Commercial Bid and during the bid clarification; In case of MSME exemption, non-submission of correct/relevant registration certificate; Non-submission of undertakings / declarations as per BEC;

AWARENESS - PROCUREMENT PROCESS Common deficiencies in bids / offers (contd…) Not indicating applicable tax rates; Deviations taken to Price format - ‘Notes’ are deleted or changed or additional notes and/or assumptions added; Non-submission / Insufficiency of documentary evidence towards BEC experience criteria; Submission of unsolicited documents making the bid voluminous and creating ambiguity in evaluation of bid; Deviations to important tender conditions viz. Warranty, Payment Terms, Delivery / Mobilization Period etc. ; Clarifications / deficient documents submitted are not as per requirement; Delay in submission of Security Deposit, also submission of Performance Bank Guarantee in incorrect format with no or incorrect reference of contract number; Not signing all the pages of the Integrity Pact as per the proforma.

AWARENESS - PROCUREMENT PROCESS Major expectations from vendors Avoid request for extension in Tender due dates. Submission of complete and clear bid. Timely submission of Security deposit/PBG and signing of the contract. Timely completion of supplies / contract. Submission of complete documents for payment. Avoid unfair practices.

AGENDA q Introduction and Objectives q Policy formulation – ONGC Videsh q Procurement – Corporate office q Procurement – Overseas offices q Procurement – BD activities q Key Initiatives q Awareness to Procurement process q Conclusion

CONCLUSION ONGC Videsh and Business Partners are in symbiotic relationship, we need each other to exist and grow in Win-Win Situation. Interactive meets are way forward to strengthen business relationships with mutual trust. ONGC Videsh is committed to transparency in all its dealings. ONGC Videsh team available for resolution of all issues from Business Partners. Together we can cut down delays in tendering process and execution of contracts.

Thank You For any query, information or suggestions, you may contact Head Commercial ONGC Videsh Limited, 3 RD Floor, B wing, Deendayal Urja Bhawan, 5 Nelson Mandela Marg, Vasant Kunj, Delhi -110070 Contact No. +91 -11 -26753308 Fax No. +91 -11 -26129345/46