Gail Scraps $7-billion LNG Ship Tender
Gail India Ltd has scrapped a tender that would have led to the construction of three massive liquefied natural gas (LNG) carriers at Indian shipyards.
After postponing tender deadline thrice and also one year later, state-owned gas utility GAIL India Ltd has not found any bidder for its USD 7 billion tender to hire newly-built LNG ships to ferry gas from the US.
GAIL's tender to hire nine newly-built liquefied natural gas (LNG) tankers drew a blank due to the government's condition of building a third of the ships in India, officials said. "There was no response from ship owners and GAIL decided not to extend the tender beyond 17 February. The tender has lapsed," a company spokesperson said.
GAIL will have to re-work the terms if and when it issues a fresh tender to make it more acceptable to fleet owners. Prospective bidders for the original tender were required to quote for lots of three vessels with a provision that, for each lot, one of the vessels would be built in an Indian yard.
This is a setback for the government’s Make India initiative that seeks to encourage domestic manufacturing. Make in India, a pet theme of Prime Minister Narendra Modi, aims to transform the country into a manufacturing powerhouse to create jobs and boost exports.
A shipping ministry official briefed on the matter said that Gail wants to remove the condition for building three LNG carriers locally in the revised tender. This has been Gail’s stand from the time the tender was in the drawing board stage. A final call on this, though, will have to be taken by the government.
Pipavav Defence & Offshore Engineering, Cochin Shipyard and Larsen & Toubro have been identified as the three facilities in India that could make an entry into the sector, but they would need to strike technology transfer deals with experienced shipbuilders and be licensed by containment system designers.
Oil Minister Dharmendra Pradhan and External Affairs Minister Sushma Swaraj had tried to persuade South Korea, the world's largest LNG tanker manufacturer, to rescue the tender.
Four Korean shipyards qualify for GAIL's tender requirements -- Samsung Heavy Industries, Daewoo Ship Building and Marine Engineering, Hyundai Heavy Industries and STX Offshore and Shipbuilding (STX) -- but none of them showed any interest in the tender, they said.
Gail needs the LNG tonnage to lift a total of 5.8m tonnes per annum (mtpa) of LNG that it is buying from the US. GAIL will start receiving LNG from the US from December 2017 and it needs the tankers before that. It has already lost one year in the tendering process.
