In a notable development, the Union Government has amended the purchase-preference-local-content (PPLC) policy for the oil & gas sector. The new policy allows bidders using local products to secure contracts even if they quote rates 20 per cent higher than the lowest bid. Earlier, the purchase preference margin was kept at 10 per cent. Further, the policy will be applicable for all the tenders issued by public sector oil and gas companies and their joint ventures. It is expected to give a boost to domestic manufacturing.
Accordingly, the ‘Class 1 local supplier’, or a supplier whose goods and services has 50 per cent or more local content, will get purchase preferences for government procurements. Further, for procurement of goods or services where there is sufficient local supply capacity, only Class 1 suppliers will be allowed to participate in the auctions.
The amended PPLC policy also states that if a foreign government does not allow any Indian supplier to participate in auctions in their country, the Ministry of Petroleum and Natural Gas may exclude bidders from that country from taking part in auctions in India.
Currently, more than 8,000 oil and gas of projects of central public sector enterprises are underway, including city gas distribution projects. Of the total cost of Rs 5.88 trillion of these projects, Rs 1.2 trillion is targeted to be incurred as capital expenditure during 2020-21 itself.