Ratnagiri wants to cancel Gammon contract

Vol 13, PW 19 (11 Mar 10) Midstream & Downstream

Civil construction contractor Gammon India is under fire for its failure to begin dredging the Dabhol shipping channel - making it impossible for the much-delayed LNG terminal to receive its first shipment before the current fair weather window ends in May.

Dabhol LNG terminal owner Ratnagiri Gas tells PETROWATCH Gammon has not even begun dredging the channel, despite carrying out preliminary survey work at the 5m t/y terminal south of Mumbai. Ratnagiri is so upset about missing its April deadline for first LNG to the terminal - the third missed deadline - that it wants to cancel the Rs97cr ($21m) contract and award it to the next lowest bidder, Hyderabad-based Dharti Dredging, which quoted Rs150cr ($32.75m).

“But as a government promoted company,â€‌ admits a Ratnagiri source, “We have to follow procedure even if we want to cancel this contract.â€‌ Gammon should have completed dredging within five months from November 27, 2009 but has been making ridiculous excuses, claims Ratnagiri.

“Gammon says we need to comply with safety issues before work begins,â€‌ says Ratnagiri. “But it is Gammon’s responsibility to comply with safety issues not ours! Gammon also says it doesn’t have permission to begin dredging.

â€‌ Our source believes this is a very odd thing for Gammon to say as previous Dabhol owner Enron already had clearances for dredging and had completed 80% of the work. He alleges the delay is because Gammon does not have equipment ready.

“Gammon has unofficially sublet our contract to another Mumbai-based company,â€‌ adds Ratnagiri. “And that company also doesn’t have its equipment ready.

Three months have been wasted and dredging can begin only after the monsoon (September 15)!â€‌ Gammon was supposed to dredge 2.5m cubic metres of silt and 60,000 cubic metres of rock from a 300-metre wide, 4-km long stretch of Dabhol seabed so LNG tankers could move in and out.