No joy for Central India Pipeline bidders

Vol 6, PW 6 (22 May 02) Midstream & Downstream

Companies interested in constructing the proposed Central India pipeline will be disappointed.

Petronet Central India - the company overseeing bidding - has turned down several demands made at a pre-bid conference on 14th May by bidders Reliance, L&T and an alliance of Sun Securities and OAO Stroytranzgas of Russia. A source tells us Petronet CI directors met a day later on 15th May to respond to the demands.

Sadly for the bidders they agreed to only a "few minor issues", but rejected the major demands. For instance, bidders will not be allowed to change either the diameter of the pipeline or its route - a key demand of Reliance and Sun Securities.

Also rejected was a demand for take or pay agreements to make the project bankable. "We will not be able to arrange take or pay," reveals a source.

"The BOOT concessionaire will have to arrange this on his own." Petronet refused Reliance's demand that the BOOT period should be for 30 years and not 15 as laid down in the concession document. Also refused was Reliance's demand that after the BOOT period the pipeline should revert to Petronet at "fair market value" not Rs1.

Petronet directors likewise rejected a demand by the Sun Securities consortium that it write a letter promising there would be no competing pipeline. They also rejected the bidders' demand that the Right of Way for the entire length should be in place before construction.

"No pipeline company begins work with the entire ROW in place," adds Petronet. "You get the ROW section by section and simultaneously lay the line."

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