GAIL tender for Dabhol to Bangalore pipeline

Vol 13, PW 26 (17 Jun 10) Midstream & Downstream

Good news for small pipeline contractors in a GAIL tender to lay a 1000-km gas pipeline from Dabhol in Maharashtra to Bangalore in Karnataka.

PETROWATCH learns GAIL’s project manager Engineers India invited bids on June 10 to lay this 16m cm/d capacity pipeline from the Ratnagiri Gas-owned Dabhol LNG terminal to India’s information technology hub Bangalore. GAIL has divided the 1000-km long pipeline into 10 sections.

Contractors can bid to lay one or more of these stretches depending on their resources. Such generous terms, say observers, will help smaller pipeline contractors compete with larger rivals.

Up to 13 bidders are expected to attend a pre-bid on June 24 at the GAIL office in Delhi. Smaller contractors expected to attend the pre-bid are Jai Hind Projects, Fernas, Ace Pipeline Contracts and Corrtech International.

Established contractors Essar, Punj Lloyd, Kalpataru, IndianOil Tanking and KazStroyServices are also expected to show interest. Their main concern is the threat of being undercut.

“Larger contractors,” says a source at an established company, “have been losing business to smaller ones, unable to match their rock-bottom quotes.” Small-scale player Corrtech, for example, bid nearly 60% to 70% lower than Punj Lloyd in a recent tender - and won the contract.

Bigger players are at a disadvantage, we hear, because they have greater ‘overheads’ and can’t match these low rates. Another established contractor says it will decide whether to bid in the GAIL tender closer to the July 12 submission deadline for technical bids.

As of now, GAIL has not said when price bids will be opened. Dabhol has not yet received any LNG cargoes, but clearly, that isn’t stopping GAIL forging ahead with plans to lay a gas pipeline to gas-hungry Bangalore.

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