Gadkari wades in to salvage sinking LNG shipbuilding plan
The Shipping Ministry is making a last-ditch attempt to help India enter the LNG shipbuilding space and join a select list of nations specialising in this business.
The floundering plan first reported by Business Line is being salvaged in the backdrop of two key developments since the beginning of the month.
One is the grand success of the IPO of Cochin Shipyard Ltd, the only local yard that has secured the technological capability to build such sophisticated tankers. The other is the exit of Arvind Panagariya from NITI Aayog, which found the plan not feasible.
Shipping Minister Nitin Gadkari is now scouting for ideas to make the plan work. The Ministry had been largely ignored by the Panagariya-led panel while writing a report on the feasibility of the plan at the behest of the PMO.
“The Shipping Minister is very upbeat about the plan, especially after the smashing success of the IPO of Cochin Shipyard, by defying all odds facing the industry,” a Ministry official said. “We will make a last push and go all out to make it happen.”
Cochin Shipyard was listed on the BSE on August 11, making it the first state-owned shipbuilder to be listed. It will utilise a part of the share sale proceeds to construct a new dry dock, its second, to help build larger ships including LNG carriers.
To conclude that the plan was not feasible, NITI Aayog cited the high cost at least $100 million more of building an initial set of LNG tankers in India, and the prospect of having to extend government counter-guarantees to the project.
“He (Panagariya) is no longer there,” the Ministry official said. The government has since named economist Rajiv Kumar, a senior fellow at the Centre for Policy Research, to helm NITI Aayog.
The Shipping Ministry concedes that the high initial cost of constructing LNG tankers in India is a “matter of concern”. “But that is the price we have to pay for getting started on a new business segment. We are willing to work around that by giving a helping hand,” the official said.
Unlike earlier prime ministers, Narendra Modi has taken a keen interest in shipbuilding and had even visited the main yard of Hyundai Heavy Industries, the world’s largest shipbuilder, at Ulsan during a visit to South Korea in May 2015.
Cochin Shipyard has signed a technology collaboration pact with South Korea’s Samsung Heavy Industries Co Ltd to build LNG ships. This came after External Affairs Minister Sushma Swaraj lobbied with Seoul. The firm also secured a licence from GTT, France, to use its patented Mark-III LNG containment systems.