GAIL cancels tender over policy to buy local steel

26 June 2017

GAIL has cancelled the tender for procurement of steel for its Jagdishpur-Haldia pipeline to give preference to local manufacturers. The 700-km pipeline for the Bokaro-Dhamra section had a steel component of 170,000 tonnes and the value of the project was Rs 1,200 crore, sources said.

North China Petroleum Steel Pipe Co was the L1 bidder for more than 85 per cent of the steel supply for the project.

GAIL’s cancellation is in line with an official notification for providing preference to locally manufactured steel in government procurement. The policy is applicable to all government tenders where price bids had not been opened till the time the notification was issued.

Sources said technical bids for the Bokaro-Dhamra pipeline segment were opened in March and price bids in April. An extension was sought for placing orders, after which the tender was cancelled.

Last week, another GAIL tender for the Vijaipur-Auraiya pipeline project was re-floated for the same reason. Technical bids for the project had been opened but not the price bids. This 358 km pipeline has a steel component of 131,000 tonnes.

Upcoming GAIL tenders are for the 542 km Bokaro-Angul section of the Jagdishpur-Haldia pipeline with a steel component of 142,000 tonnes and the 70 km Dhobi-Durgapur section with a steel component of 19,000 tonne. Including the project that has been cancelled, their combined value is around Rs 3,300 crore.

According to the notification by the steel ministry, the preference to locally made steel covers all procurement by the government and public sector undertakings. An exception is made where specific grades of steel are not manufactured in the country or where the quantity sought cannot be met from domestic sources.

A GAIL spokesperson confirmed the tender had been cancelled because of the notification on use of locally made steel. “The policy for providing preference to domestically manufactured iron and steel products in government procurement stipulates that the policy shall come into effect from the date of its notification (May 8) in all tenders where price bids have not been opened. In line with the policy guidelines, VAPPL (Vijaipur-Auraiya-Phulpur pipeline) tenders for line pipeline valuing approximately Rs 900 crore have been re-invited including the provisions of this policy,” the spokesperson said.

He further said in all future tenders of steel line pipes, the provisions of domestically manufactured iron and steel product policy would be incorporated.

Indian steel producers had pointed out PSUs like GAIL and ONGC did not access funds from multilateral agencies and were not required to invite global tenders but were sourcing pipes from countries like China at predatory prices.

Chinese pipe prices are at least 20 per cent lower than Indian prices. India has 6 million tonnes of pipe-making capacity, of which 35 per cent is in use.

Source-business-standard