GAIL May Scrap Tender for Hiring LNG Vessels

GAIL May Scrap Tender for Hiring LNG Vessels

State-run gas marketer GAIL India will likely scrap the tender for hiring liquefied natural gas (LNG) ships after failing to negotiate acceptable terms with bidders in what would hurt India’s ambition to build high-tech LNG carriers at home under the `Make in India’ programme.

GAIL had issued a tender last September seeking to charter at least nine LNG vessels to bring home from the US up to 5.8 million tonne of gas annually from early 2018. Successful bidders were supposed to locally build a third of all ships they make under the Make in India plan.

GAIL received bids from two Japanese consortiums after the deadlines for submissions were extended more than once. The bids, however, were not fully aligned with the tender and contained several conditions, which the GAIL executives hoped to resolve in negotiations that lasted more than five months with the bidders.

GAIL and the Japanese consortiums have now ended their negotiations after failing to reach a common ground, sources with direct knowledge of the matter said. In the next few days, the board of GAIL will likely consider the proposal to scrap the current tender for LNG carriers and issue a new one to hire ships without any condition on building some ships locally , sources said. The bidders wanted the Indian government to share some of the risks they saw in investing billions of dollars in making LNG carriers.

They sought some form of guarantee that would help compensate them if gas supply from America were to shrink during the contract period, sources said.

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