Gammon India wriggles out of Bina-Kota pipeline job

Vol 12, PW 13 (13 Nov 08) Midstream & Downstream

Bharat Petroleum thought it had reeled in an amazingly low bid from Gammon India to lay a 257-km-long, 18-inch diameter petroleum product pipeline from its upcoming 6m t/y refinery at Bina in Madhya Pradesh to Kota in Rajasthan.

But it turns out the big catch slipped away with a minor scratch. On September 25, Gammon India emerged as the lowest bidder to lay the BPCL pipeline to evacuate petroleum products from the refinery to the lucrative north Indian market.

BPCL delivered a Letter of Intent (LoI) to the Gammon India Mumbai office around September 30 or October 1 to seal the deal. But to its surprise, Gammon India wrote back to BPCL around October 5 or 6 and declined to carry out the job.

“We never accepted the LoI,â€‌ confirms Gammon India. A source adds that Gammon declined the job because of manpower and resource shortages.

“We were awarded the Bina to Kota pipeline and were also awarded the Duliajan to Numaligarh pipeline the next day. Two days after that we won two overseas jobs.

â€‌ Our Gammon India source adds that the company also felt that the BPCL project would have ended up unprofitable. “I might as well have fewer jobs and do them well rather than lose money.

â€‌ The other four companies that submitted bids tell us they always doubted Gammon could complete the BPCL project at the price quoted of Rs84cr ($20m). Punj Lloyd quoted Rs128cr ($30.5m); Jaihind Projects quoted Rs130cr ($31m); Kalpataru quoted Rs132cr ($31.5m) and KazStroyService quoted Rs141cr ($33.6m).

BPCL, we learn, re-issued the tender to hire a pipeline contractor on October 24 and has set a date of November 17 to receive bids and expects the earlier contractors to apply. The contract will be awarded on December 15 and is scheduled to be completed in 10 months to coincide with the Bina refinery commissioning in December next year.