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Steel price surge could derail GAIL Bokaro-Dhamra pipeline project- The 19th China (Guangzhou ) Int’l tube & pipe Processing Equipment Exhibition
9/13/2017 管材展-钢管展-steel tube expo-tube &pipe expo |
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The Wire reported that in June, state owned gas transporter GAIL India had cancelled INR 1,250 crore tender for the Bokaro-Dhamra section of the the Jagdishpur-Haldia pipeline project, hoping for a fall in steel prices. But the gas transporter’s bet has gone wrong with prices of domestic steel rising. Global steel prices have jumped by nearly 30% between June and August. The benchmark international prices of HR coil, which is used as raw material by pipe manufacturers and accounts for 85% of the total costs, have risen by more than 30% between June and August, as per data compiled by credit rating agency ICRA.
Pipe manufacturers have started passing on the increased costs to gas pipeline developers, which is getting reflected in fresh price bids invited by the oil sector PSU for the project, sources said. Based on received price offers, GAIL will soon hold reverse bidding. It would be a big loss of face for the PSU if the discovered price is higher compared to the initial bidding. Moreover, escalation in project costs could necessitate revision in gas transportation tariff and hurt project viability.
GAIL’s worry does not end here. Chinese supplier North China Petroleum Steel Pipe Co Ltd, which had emerged as the lowest bidder for the project, has moved the Supreme Court against PSU’s decision to scrap the tender and the matter may come up for hearing later this week.
- The
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