Chinese suppliers land Jindal Saw in a mess

Vol 14, PW 12 (02 Dec 10) Midstream & Downstream

Pipeline manufacturer Jindal Saw is under fire from GAIL because its Chinese and South Korean steel suppliers have backed out of a commitment to provide high-grade steel pipe for the proposed 1389-km Dabhol to Bangalore trunk gas pipeline.

As punishment, PETROWATCH learns Jindal is under pressure from GAIL to reduce by Rs6cr ($1.2m) its (undisclosed) winning price when bids were opened for this job on August 17 after a ‘reverse auction.’ “Before bidding we received confirmation letters from our suppliers that they could provide steel for this project in line with GAIL’s specifications,” stresses Jindal.

“But after we won the contract, our suppliers said they could not supply steel of the same chemical specifications needed for the contract. We informed GAIL and (project consultant) Engineers India within two weeks.

” Central to this problem are two different grades of steel pipe: the X-70 grade, and the more robust X-80 grade. In its winning bid Jindal promised to supply 40,000 tonnes of X-70 grade (equivalent to 200-km length) and 67,000 tonnes (equivalent to 405-km length) of the stronger X-80 grade, with diameters ranging from 18 to 36-inch, from November this year.

But Jindal stresses it can no longer supply X-80 pipe because its Chinese and South Korean suppliers have backed out. Desperate, Jindal tried to persuade GAIL to accept a type of X-80 pipe with different chemical specifications in September, but GAIL refused.

Left with no choice, Jindal approached GAIL and EIL in November with an offer to supply a thicker grade of X-70 pipe, instead of the X-80 grade which it can’t arrange. “Till now,” adds Jindal, “they have not accepted our offer.

” Contacted by this report, GAIL refused to comment.