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In the first ever such tender for promoting LNG ship building in India, GAIL India has called for bids from companies holding a minimum 25% equity for seven years in three such operational vessels.
Besides, Indian shipyards which bid for the contract would need to have a contractual agreement with an overseas shipyard that has constructed and delivered at least one LNG vessel with a capacity of 1,35,000 m3 or more in the preceding 10 years.
According to the bid conditions, the LNG vessel must have been in service for at least one year prior to the submission of bid. Indian shipyards involved in development of the LNG carrier would also need to have incorporated the membrane or MOSS type containment system and DFDE/TFDE /steam type propulsion system.
Indian state owned GAIL invited the proposals since it needs vessels for importing LNG from the US in a two-decade long contract that begins September 2017. It plans to leverage its burgeoning import requirements to facilitate local expertise in LNG vessel construction.
The potential bidders are required to bid for three vessels, at least, in one lot, with the caveat that one of the three ships will be constructed at an Indian shipyard.
The experience of operating the vessel could be direct or an indirect one through its parent company, or a wholly owned subsidiary. Additionally, the LNG vessels owned by the bidder should have been operational for a minimum duration of two years prior to the bid submission.
For joint ventures or consortium bids, the total number of members cannot be greater than four including the leader. The leader of the consortium would be required to be the largest shareholder in at least one LNG vessel out of the lot of three. While the leader of the consortium must meet the technical criteria mentioned above, the consortium must together fulfill the overall technical specifications.
For both single-party as well as the consortium leader bidding for one lot, the requisite annual turnover is pegged at $ 45 million in any one of the preceding 3 financial years. Other consortium members should have had an annual turnover of half of that applicable for the leader in the same frame of time.
An additional increment of $ 45 million is factored in for each progressive Lot bid, which ends at $ 135 million and 3 Lots respectively for both the single bidder as well as the consortium leader. The net worth of both should also not be less than $ 45 million.
The shipyard, both overseas and Indian, should also have had an annual turnover of at least $1 billion in any of the preceding three financial years and a net worth of $500 million or more. However, industry analysts point out that this financial requirement might need to be looked into.
“Although a lot of Indian shipyards have technical capability and do manufacture extremely complex ships, the gestation period of manufacturing a ship eats into their profitability and revenue generation,” said Hemant Bhattbhatt, CEO, HMSA Consultancy Services.
Currently, there are no Indian shipyards that have been involved in the construction of LNG carriers due to an absence of the requisite technological qualifications. So a contractual agreement of any Indian shipyard with an overseas shipyard that fulfills all requirements will be the necessary precondition which will make it eligible for LNG vessel construction.
That will entail technical collaboration and technology transfer and consequently, India joining the group of countries with LNG-ship construction capacity.
