Petronet-India rejects Sun bid for Central India Pipeline

Vol 6, PW 19 (20 Nov 02) News in Brief

Petronet-India has sent a "regret letter" to a consortium of Sun Securities and OAO Stroytransgaz of Russia in response to its bid for the 1,760-km, Rs2, 600cr ($541m) cross-country Central India Pipeline.

Petronet-India tells us Sun did not submit the security amount of Rs10cr ($2m). A more compelling reason, however, is that Sun's bid was conditional on oil companies signing take-or-pay agreements for use of the pipeline.

Humbled by the lack of response, Petronet-India is reviewing the technical specifications of the pipeline, including the diameter, pipeline length and number of pump stations to reduce the cost of construction to Rs1, 500cr ($312m). We understand Petronet-India then wants to issue a limited tender to Sun, Reliance and Larsen & Toubro.

Surprisingly, Sun was the sole bidder for this project. L&T and Reliance both showed interest but ultimately didn't bid.