A multi-billion dollar LNG ships tender, floated by state-run GAIL (India) more than two years ago, continues to be stuck as a designated panel is yet to finalise the new contours of the tender.

A revision in the bidding norms was necessitated after foreign shipbuilders found risk-apportioning was tilted against them. (Reuters)

A multi-billion dollar Lng Ships Tender, floated by state-run GAIL (India) more than two years ago, continues to be stuck as a designated panel is yet to finalise the new contours of the tender. A revision in the bidding norms was necessitated after foreign shipbuilders found risk-apportioning was tilted against them.

The committee, headed by Niti Aayog chairman Arvind Panagariya, was formed in November last year. GAIL had floated a tender to hire nine newly-built LNG carriers for transportation from the US. However, due to unfavourable response from ship builders, the $7-billion tender was postponed thrice and ultimately cancelled in November last year. The tender was first launched with a final date for bid submission of October 30, 2014, and was later extended to December 4 the same year, and January 6 and February 17 next year, with the last being later extended till 31 March.

The bids were invited in lots of three with the caveat that one of the ships will have to be built at an Indian shipyard to promote the National Democratic Alliance government’s flagship Make in India programme. As per reports, the world’s leading LNG ship-owners had made two separate consortia to submit bids. The first consortium included Mitsui OSK Lines, Nippon Yusen Kabushiki Kaisha and Mitsui and Co, and another having Mitsubishi Corp, Kawasaki Kisen Kaisha, GasLog and Foresight on board. However, the stakeholders failed to agree upon risk-sharing on India-made LNG carriers.

The gas company has long-term agreements with Sabine Pass and Cove Point projects in the US for supply of LNG which is expected to start from December 2017. In this respect, the company plans to time-charter these ships of cargo capacity of 150,000-180,000 cubic metres each. The bids were invited in lots of three with the caveat that one of the ships will have to be built at an Indian shipyard to promote the National Democratic Alliance government’s flagship Make in India programme.

“Regarding the long-term procurement, a view is being considered and a committee headed by Arvind Panagariya is examining the pros and cons of making ships in India. To meet the requirements of GAIL, we are going for short-term hiring of ships from the market,” said BC Tripathi, chairman of GAIL. Tripathi added since there was no favourable response to tenders, the issue has been discussed in the government and it has been decided that this needs a re-examination on making of ships.

Among the Indian ship makers, only Cochin Shipyard —which has entered into a technology pact with South Korean firm Samsung Heavy Industries Co and has obtained a licence from France’s GTT for using the latter’s patented Mark-III LNG containment systems — has the wherewithal to built LNG transporters and fitted the criteria set out by GAIL. Tripathi said that the tender will definitely come, but in what form it will come is being discussed. “In the long term, that is what is desired,” he added.

According to bid documents floated earlier, GAIL could take up to 10% equity stake in any or all of the nine ships with operator Shipping Corporation of India having a right to 26% interest.

For GAIL Tenders contact on +91 9099090533