Dahej to Dabhol pipeline bids extended till end May

Vol 9, PW 26 (20 Apr 06) Midstream & Downstream

GAIL continues to hold internal discussions about technical and commercial issues surrounding the proposed pipeline to connect the Dahej LNG terminal in Gujarat with the soon-to-be-ready Dabhol LNG terminal in Maharashtra.

Original plans were to carry LNG from Dahej to the industrial hub of Uran in Maharashtra but the oil ministry has asked GAIL to connect the pipeline to Dabhol with a reverse flow capability. The validity of bids to lay the pipeline from Dahej to Uran was to expire on 31st March but GAIL sought extensions till 29th May from all the qualified bidders.

Everybody except Essar has agreed to the extensions, we are told. Essar agreed to extend the bid validity only for Spread 2 and not for Spread 1.

Essar had emerged lowest bidder for both spreads and its decision not to support the extension validity of both bids caused surprise. GAIL is debating whether this constitutes a post-tender modification of bid conditions by a bidder, we hear.

The other view is that Essar is looking for an escape route. They bid too low for Spread 1 and realised this much later when the other bids were opened, says a source.

Essar saw this (request for extension of bid validity) as a good opportunity to get out of Spread 1. They also got the feeling that theyll get a contract for just one maybe Spread 1 - and not both spreads.

Pipeline industry sources say one of GAILs key reasons for seeking bid validity extensions is that it is debating whether to invite revised prices or float a fresh tender from laying contractors for the 183-km extension from Uran to Dabhol. According to GAILs original schedule, the pipeline was to be ready by February 2007.

But the oil ministry not only wants the pipeline extended to Dabhol but the schedule to be compressed further. The ministry wants the schedule compressed by at least a month and a half, we hear.

They want the pipeline to Dabhol ready latest by mid January (2007). Once the pipeline is connected to Dabhol, the ministry wants to transport LNG from Dahej or Hazira to fuel the Dabhol power station till LNG is available from its dedicated import terminal.