Cochin Shipyard, Global United bid for $7-bn LNG tender

Consortium proposes to build six LNG vessels under BOT model

The Make In India initiative launched by the government in 2014 seems to be taking shape on the ground. Last month, state-owned Cochin Shipyard and Chennai-based Global United Shipping India proposed a joint bid under the build–operate–transfer model for six new liquefied natural gas (LNG) vessels for gas utility firm GAIL, making it the only Indian bid for the country’s biggest shipping tender.

This tender worth $7 billion has already received bids from two Japanese consortia, whose date for submission of offer was March 31, 2016. While Mitsui OSK Lines-Nippon Yusen Kabushiki Kaisha and Mitsui & Co Ltd form one consortium, the other comprises Mitsubishi Corporation-Kawasaki Kisen Kaisha and GasLog.

The LNG vessels with a cargo capacity of 150,000-180,000 cubic metres are meant to ferry gas cargo for GAIL from the US. An industry official close to the development claimed the terms attached to the bid by the Japanese consortia were “in sharp deviation from the conditions set by GAIL in its tender”, making it difficult for India’s largest gas trader to take a decision on the contract.

Cochin Shipyard was recently licensed by France-based Gaztransport & Technigaz to build LNG ships for any client worldwide and meets all requirements of the GAIL tender.

The bid by Indian players is, however, late. “We are trying to talk to GAIL to consider late submission of this bid,” said an official with Global United Shipping India. “The size and the magnitude of this project is large and, therefore, we faced some delays in being able to put together a formal offer,” he added.

According to the Cochin Shipyard-Global United bid proposal, two out of six vessels would be built in India at Cochin Shipyard, while four would be made outside the country. “To meet the immediate requirement of GAIL, we will consider providing bridge vessels to carry the cargo as required by GAIL until the new builds are ready,” said the Global United official cited above. Global United Shipping is a subsidiary of Mitsui & Co, which holds a 45 per cent stake in the former.

“If the consortium bags this contract, it will augur well for its planned IPO (initial public offering),” said Anil Devli, CEO, Indian National Shipowners’ Association. In November 2015, the government approved the IPO proposal for Cochin Shipyard. Nearly 34 million equity shares are expected to be offloaded, comprising a fresh issue of 22.6 million equity shares and sale of 11.3 million more as an offer-for-sale by the government.

The government plans to sell 10 per cent of its stake in the company, which is planning to raise Rs 600-700 crore through the IPO. Cochin Shipyard is one of the few profit-making shipbuilding companies in the country with negligible debt in the books.
STEPPING ON THE GAS

• GAIL gets first Indian bid for LNG vessels
   
• Cochin Shipyard-Global United Shipping consortium bid for six LNG vessels
   
• Indian consortium wants GAIL to consider late bid submission
   
• Cochin Shipyard has Gaztransport & Technigaz licence to build LNG ships for any client worldwide
   
• Global United Shipping has provided technical supervision for LNG project overseas