Mumbai: Sri Lankan shipbuilder Colombo Dockyard Ltd has emerged the lowest bidder among 13 contenders, including several Indian firms, to build five anchor handling tug-cum-supply vessels (AHTSVs) for state-run Shipping Corporation of India (SCI).
The cost of building the five vessels that can pull up to 70 tonnes will likely be around $100 million or Rs406 crore. The AHTSVs will also be equipped with Dynamic Positioning 1 (DP1) system that helps them maintain their position in rough seas. Japanese shipbuilder Onomichi Dockyard Ltd holds a 51% stake in Colombo Dockyard Ltd.
“Colombo Dockyard Ltd has quoted the lowest price for building the AHTSVs. The SCI board will approve the bid at its next meeting,” said a company official who did not wish to be named. SCI has the freedom to make decisions involving capital expenditure of up to Rs500 crore without consulting the shipping ministry.
AHTSVs are offshore supply vessels used in offshore oil exploration and production. They supply materials such as potable water, cement, fuel, food-boxes, equipment and spares to drilling rigs and offshore installations. On their return voyage to the supply base they bring cargo, also termed ‘back-load’ from offshore installations. They are also used to tow drilling rigs from one location to another.
Indian builders including ABG Shipyard Ltd, Bharati Shipyard Ltd and state-run Cochin Shipyard Ltd had participated in the tender along with global yards such as Norway’s Havyard Leirvik.
The new offshore vessels will replace older vessels on SCI’s fleet. Currently, the company has 10 support vessels with a pulling power of 60 tonnes. These vessels are 22 years old and will have to be decommisioned in about eight years.
Colombo Dockyard recently won a $ 36.6 million order to build two passenger vessels for the Indian government (the vessels will be used on the Lakshadweep and Andaman and Nicobar Islands route). It is also building two AHTSVs that can pull up to 80 tonnes for Greatship (India) Ltd, the wholly-owned offshore subsidiary of India’s largest private shipping company Great Eastern Shipping Company Ltd.
Local shipowners are unable to meet the rising demand for supply vessels from oil explorers including Reliance Industries Ltd, Gujarat State Petroleum Corporation, Hardy Oil, Cairns Energy Ltd, British Gas and Oil and Natural Gas Corporation Ltd. Only 30% of India’s supply vessel needs are supplied by Indian shipowners.
Unlike the normal shipping business where ships are hired either on voyage charter (for a particular journey) or on time charter (for a certain time), offshore support vessels are typically leased for three to five years, ensuring stable revenue streams for the shipping company that owns them.
The offshore business contributes about Rs75 crore to SCI’s annual profit. The company’s offshore business revenue comes mainly from ONGC which hires these vessels to support its exploration and production needs on the east and west coasts.