EIL wants stake in $1.9bn GAIL pipeline

Vol 16, PW 13 (24 Jan 13) Midstream & Downstream

State-owned Engineers India (EIL) believes in putting its money where its mouth is.

In addition to bidding for the Project Management Consultant (PMC) contract for GAIL’s proposed 1550-km gas pipeline from Surat in Gujarat to Paradip in Orissa, EIL is also talking to GAIL about picking up a 5% equity stake in the project. GAIL is expected to float the PMC tender by April and to award the contract by June.

“Our core strength is providing EPC and PMC services,” EIL chairman AK Purwaha tells PETROWATCH. “We offer to pick up 5% at all projects where we see ‘synergies’ so clients (like GAIL) can be confident that as a promoter EIL will give 100% to ensure work is completed in time.

” Purwaha dismisses concerns that seeking a stake in a project and also bidding for the PMC job is a conflict of interest. “We don’t participate in EPC tenders where we are PMC,” he says.

“There’s no conflict if we hold equity in a project where we are also PMC.” GAIL is preparing to issue a tender for a detailed route optimisation survey for the pipeline by February.

“After hiring a route optimisation consultant our marketing department will begin meeting potential customers to assess gas demand,” says GAIL. “We will invite bids from pipe suppliers by the end of this year and begin laying the pipeline by end-2014.

” GAIL expects the pipeline to be commissioned only in financial year 2016-17. But PNGRB rules say it must complete the pipeline by April 24, 2015, three years from the date on which it won PNGRB authorisation.

“We will approach the Board for an extension,” adds GAIL.