GAIL consults Transparency International

Vol 14, PW 14 (13 Jan 11) Midstream & Downstream

Berlin-based corruption watchdog Transparency International has given GAIL the green light to re-tender for pipe needed for its 1389-km Dabhol to Bangalore gas pipeline.

“We consulted many experts,” asserts a GAIL source, “including Transparency International and were advised to re-tender. Otherwise, we would have been accused of favouring (pipe-manufacturer) Jindal Saw.

” But pipeline contractors are still crying foul and accuse GAIL of favouring Delhi-based Jindal. On August 17 last year, GAIL hired Jindal to supply 67,000 tonnes of X-80 grade steel pipe, equivalent to approximately 405-km of pipe.

Jindal, however, failed to deliver any X-80 pipe to GAIL, blaming its Chinese and South Korean suppliers for backing out of their commitments at the last minute. In mid-December, GAIL was forced to re-tender so it could still meet its internal deadline of March 2012 to commission the pipeline, designed to carry 16m cm/d of gas.

But this time round GAIL decided it wouldn’t risk any more X-80 grade steel supply disruptions and issued the tender for 77,000-tonnes of X-70 grade pipe. X-80 pipe, says an industry source, is undoubtedly superior to X-70 but choosing to go for X-70 shouldn’t cause GAIL any real problems.

“However, X-70 is thicker than X-80,” we hear, “so more steel is required to manufacture the pipe (which is why GAIL now needs 77,000-tonnes instead of 67,000-tonnes).” GAIL wants pipe manufacturers to submit technical and price bids by January 14.

“GAIL will evaluate our bids by early February,” says a pipeline manufacturer, “and announce a date for the ‘reverse auction’ bidding process.” Nearly 12 pipe manufacturers including Welspun, Man Industries, Surya Global, Mega Engineering and Essar are expected to bid.

Most surprising is GAIL’s decision to allow Jindal Saw to also bid in this new tender, despite the company’s earlier failure to deliver. “Why shouldn’t we allow Jindal to bid” questions a defiant GAIL source.

“They failed to deliver only because their steel suppliers backed out. It’s not their fault!”