Gail retendering of Dahej-Uran pipeline to benefit domestic firms

The Union petroleum minister Mani Shankar Aiyar's recent direction to Gail India Ltd for retendering the Dahej-Uran pipeline project, will benefit the HSAW pipe manufacturers in the country.

Earlier, Gail invited bids for supply of pipes for its Rs 1,416 crore Dahej-Uran Pipeline (DUPL) project under international competitive bidding and Tractebel Engineering of Belgium has been appointed as the project management consultant.

However, Gail is expected to invite fresh bids soon, where leading HSAW pipe manufacturers in the country such as Saw Pipes, Welspun Gujarat Stahl Rohren, Man Industries, PSL Ltd and SAIL are expected to participate.

"We will be bidding for the retendered Dahej-Uran pipeline project for supplying HSAW pipes. Two types of pipes are used globally for gas pipelines, those with helical welding (HSAW) that cost roughly $585 a tonne, and those with longitudinal welding (LSAW) at $920 a tonne. The reason for the price difference is that the steel plates for the HSAW design are produced in India, whereas the plates for the LSAW design have to be imported. The prices charged by longitudinal pipemakers falls dramatically whenever they face competition from the helical variety for the same contract," Ashok Punj, managing director, PSL Ltd, told Business Standard on Tuesday.

Recently, Engineers India Ltd (EIL), on behalf of Gail, has invited bids for the supply of longitudinal submerged arc welded (LSAW) pipes. The specification of the tender includes that the pipes need to be of diameter of 1,067 mm.

In order to make pipes of this diameter, the width of steel plates required as raw materials would be 3,350 mm. Steel plates of this specification are not manufactured by Indian players resulting in its import.

"Welspun will bid for the Dahej-Uran pipeline project as we manufacture both HSAW pipes as well as LSAW pipes and we are looking forward to Gail tender, which is expected soon," said a senior official of Welspun Gujarat Stahl Rohren.

Some of the Indian steel manufacturers including SAIL have requested Gail to add the term 'helical saw (HSAW)' in the tender which would ensure steel manufacturers in the country to supply the entire 2,50,694 tonne of steel required for the project.

The company has undertaken a detailed analysis of the matter. The use of HSAW pipes is likely to save the foreign exchange outflow and would reduce the project cost by 25 to 30 per cent, particularly when alternative and modern technologies are available in India.

Helical seam DSAW pipes are manufactured in India to API X 70 grade specification certified and approved by American Petroleum Institute (API) and other leading oil and gas companies.

Recently, Essar Steel bagged an order to supply over 70,000 tonne of API grade steel for a project in Spain. HSAW pipes conform to the same precise specification as API X 70 grade, as is applicable to LSAW pipe. The cost of these pipes will also be lower.

According to American Petroleum Institute (API), there is nothing wrong with HSAW pipes provided they are manufactured to specifications.

The three companies from which Gail sought opinion said that although they do not use HSAW they see nothing wrong in its usage as long as the pipes are manufactured properly.