Raghav Ohri, ET Bureau May 2, 2016, 12.47AM IST
(Saipem is the current avatar…)
NEW DELHI: Another Italian company, another deal with
Indian government entities, again a strong suggestion that not everything's above board - but the contract between
Saipem and
Engineers India Ltd (EIL)/National Fertilizer Ltd (NFL) has a twist.
Saipem is the current avatar of Snamprogetti, the Italian company made
infamous in India by Ottavio Quattrocchi, who was its influential India
representative.
Q's company's current corporate form and its former affiliate Denmark's Haldor Topsoe were selected by EIL and
NFL for supplying urea
technology
and manufacturing ammonia, respectively. But the selection raises
questions — investigations by ET based on documents indicate that
parameters for selection were changed.

Further, the fact that Saipem has had several charges of corruption
leveled against it in Italy, Brazil, Nigeria and Algeria doesn't seem to
have impacted the Indian PSUs' decision. ET contacted Saipem, Haldor,
EIL and NFL for this story.
In 2010, UPA II decided to revive the
Ramagundam Fertilizers and Chemicals Ltd (RFCL) unit in the then
undivided Andhra Pradesh (now in Telengana) for the production of urea
and ammonia. EIL and NFL were tasked with developing a revival plan. EIL
took on the role of project management consultant for the Rs
5,200-crore project.
A year later EIL floated "early bids for
urea and ammonia technologies" - bids inviting technology proposals, the
first stage. Then, in 2012, "formal bids" were invited by EIL for
technology selection, the second stage.
KBR of US and Haldor
Topsoe of Denmark applied for ammonia production technology while Saipem
and Stamicarbon of Italy applied to supply urea technology.
However, the project, as documents reviewed by ET show, faced the
constraint of India's patchy supply of natural gas. But, and highly
unusually, the price offers were opened only in May 2015, three years
after bids were invited. Six months is the average period normally
between submission and finalisation of bids.
Documents show there
was no official concern about whether the long gap had made differences
to the technology landscape, produced more potential applicants as well
as the financial difficulties being faced by Saipem in the three years
leading up to 2015.
Also, some critical parameters were changed
for the project in 2015 as a consequence of the opening of bids in 2013,
the third stage. Unpriced commercial and technical bids were opened in
2013 whereas priced bids were opened in May 2015.
ET's study of
relevant documents show some of the parameters altered were those for
emission norms, product quality, scheme of liabilities and the delivery
schedule. ET has reviewed all documents that show parameters were
changed at the third stage.
For instance, the emission norms for
ammonia for the urea unit were changed from a set figure to a 'licensor
to specify' category, meaning the bidder was made free to fix the
emission norms. Also, EIL had signed an integrity pact with bidders,
which required the latter to share all information about corruption
investigations, if any, with those awarding projects.
Saipem told
ET it had "provided RFCL with all the details concerning legal
proceedings involving the company, which are fully explained in Saipem
annual reports". But EIL and NFL, driving the project, told ET they had
not received such information from Saipem. They also said there were no
efforts on their part to determine whether Saipem was under a cloud.
Saipem's involvement in graft cases was not hard to find. The Algerian
case saw a Saipem senior executive being imprisoned and both Saipem and
its Italian corporate parent, ENI, were indicted for corruption, tax and
accounting fraud. Action by US and Italian authorities has seen
penalties of millions of dollars being levied and paid. Notwithstanding
this record, Saipem was selected for the project.
Saipem told ET
there have been "amendments" about "technical and commercial topics".
Saipem also said it and RFCL "have been constantly discussing..." but
that these discussions are "confidential information between Saipem and
the client". Saipem also told ET, when asked, that its share price had
sharply fallen in the past few years.
Haldor Topsoe told ET, "...unfortunately, we cannot comment on your questions. Most of them refer to the
of other companies, who can best answer the questions themselves. Other
questions relate to contract negotiations, which we do not comment on
by principle".
NFL and EIL, responding to questions on changes in
parameters after the bid documents were opened, referred to the fact
that there were no changes in conditions between the first two stages.
The parameters were changed in the third stage.
ET sent mails and messages on March 12, 24 and again on April 23 to Anant Kumar, minister of chemicals and fertilizers, and
, minister of state for petroleum and natural gas, all of which went unanswered.