India's GAIL Postpones LNG Tender; No Takers

 

The state-owned gas utility GAIL has for the third time postponed the last date of bidding, as it couldn't finding any takers for its $ 7.6 billion  tender to buy newly-built LNG ships 

 

The company first postponed the last date of bidding from October 30 to December 4 and then to January 6. Today it put it off till February 17, according to a notice issued by GAIL.   

 

This is because the PSU firm is not able to get responses from international shipbuilders, given the condition that they should lend their technology to Indian firms. There is a mandatory provision in the tender that one ship in each lot has to be built in partnership with Indian shipyards. This is a part of the ‘Make in India’ effort.

 

The local yards that have never built LNG ships before are finding it tough to get technological tie-ups from South Korean and Japanese specialists in the field.

 

"The oil ministry has asked GAIL India to prepare a back-up plan in case the finalization of the tender is delayed inordinately," said an executive briefed on the oil ministry's directive to GAIL. Time is running out for the natural gas firm , as the massive LNG imports from the US would start in 2017 for which it need to hire the required specialised vessels. 

 

India's oil ministry, which controls national gas company GAIL India, has asked company to prepare a 'Plan B' to deal with delays on a tender to time charter nine LNG carriers for hauling LNG from the United States beginning September 2017, says sources.

 

GAIL could consider hiring LNG carriers on a short-term basis to start shipments from the US that are on a take or pay basis. This would help GAIL allow the shipowners and operators selected through the auction process to build the carriers within the minimum time required for constructing LNG carriers, even if it means getting the ships after September 2017.

 

Separately, the Indian government - through Oil Minister Dharmendra Pradhan as well as External Affairs Minister Sushma Swaraj - has started lobbying the 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 has so far shown interest in the tender.

 

The $7.6 billion investment could have been a big boost to the Indian shipbuilding industry, if global giants participated in the tender.