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Jayanta Mallick

ONGC insists on the execution of contracts

Kolkata , June 2

ONGC has thrown a spanner into the works of the de-merger and hiving off of the offshore services business of Great Eastern Shipping into Great Offshore Ltd.

ONGC, which has 40 un-executed contracts tendered out to GE Shipping, claimed that the company should continue to be responsible for the services and for the execution as also performance of the contracts with ONGC, the contracting counter-party.

ONGC's insistence on the execution of contracts by GE Shipping, first articulated in February this year, could throw the de-merger process completely off course and stall the separation of businesses among the promoter family members of GE Shipping.

Under a scheme of arrangement between Great Eastern Shipping and Great Offshore Ltd, the offshore services business of the former is to be looked after by Great Offshore.

Scheme approved

The scheme has already been approved by the Bombay High Court and is to come into force only upon receipt of approvals of any contracting counter-party under a material contract.

The execution timeframe of GE Shipping's pending contracts with ONGC, according to sources close to the development, spans a period of five months from now to about 42 months. The GE Shipping board of directors met today to review the status of the various approvals from all four contracting counter parties. In an official note to the BSE, GE Shipping said that one of the counter-parties (ONGC) "has stated that despite the transfer of the offshore services business into Great Offshore, as approved by the High Court, the company should continue to be responsible for the services and for the execution and performance of the contract with that counter-party."

The note also said "This condition being not in accordance with the very essence of the High Court approved scheme, can obviously not be accepted by the company. Further, representations are being made to this counter-party in this regard."

Contracts

The performance of the relevant contracts is guaranteed by ABN Amro. The offshore services that ONGC had contracted for from GE Shipping included chartering of 2 rigs and almost half of the GE Shipping's assets such as one constructionbarge, 19 boats and 11 harbour tugs.

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