Ministry of External Affairs to lobby Korea, Japan for shipping technology
GAIL India needs nine ships to ferry six million tonnes of liquefied natural gas that it’s contracted to buy from the US starting September 2017. Of these, three LNG carriers need to be made in India.
But with key South Korean and Japanese shipbuilders staying away from bidding process for this, the shipping ministry has called on the foreign ministry for assistance.
The idea is to lobby South Korea to push its companies to provide technology support to domestic yards, especially since Samsung and Hyundai—both of which have shipbuilding arms of repute— have found a lucrative market in India for their refrigerators, cars, phones and other products. This is their chance to play a significant in the Make in India campaign to make the country a manufacturing base, the shipping ministry has argued.
“Why should these companies keep themselves only to auto, telecom sectors when we can really use their expertise in a crucial area like shipbuilding,” a senior government official said. There doesn’t seem to be much time left. Since India does not have the expertise, an international partner has to be finalised by 2015 to provide quality assurance, training and supervision.
The Shipping Corporation will be running these ships in partnership with GAIL. Only one company, South Korea’s STX Offshore, has thus far agreed to share technology to make LNG vessels at Indian shipyards.
While STX Offshore matches most of the bid requirements, its poor net worth and weak order book raise concerns about viability. To be sure, the South Korean Development Bank, with a 97% stake in STX, has assured the government of its financial support for the GAIL project. Still, with just days to go before the last date for bids closes on December 4, GAIL is in a bit of a bind.
The shipping ministry wants leading shipbuilders, including Hyundai, Daewoo and Samsung to step up and offer to partner Indian shipyards, which have never built such vessels before. LNG carriers require highly specialised technology in order to store the gas in cryogenic conditions.
Japanese and South Korean shipyards are known for their expertise in making such vessels at a price that’s competitive compared with European yards. However, government officials said that countries guard t this knowhow closely and do not want to part with it even on commercial terms, which is why so few bids have come in.
Japanese yards have cited a labour crunch and said they don’t have enough personnel to supervise construction in India, with too many orders to meet. Cochin Shipyard, which has partnered with Japan in ship design and construction before, failed to get a positive response from companies there.