New Delhi: State-run gas utility Gail India, which has lined up multi billion dollar investment in laying new natural gas pipelines, will see savings in project cost because of falling steel prices, a company official said.
“Steel prices have fallen by over 50% in international market since January and naturally it will help us cut project cost,” he said.
To benefit from this trend, the company may re-tender sections of the Dahej-Vijaipur pipeline upgrade project.
Gail had divided the project into four sections and invited bids in January this year. Six companies -- Jindal SAW, Welspun, PSL, Man Industries, Ratnamani and Corinth of Greece -- submitted price bids.
Jindal Saw was the lowest bidder for one section, quoting a steel price of $680 per tonne while Man Industries quoted $907 per tonne to be lowest in the other three sections.
Since there was a 33% price difference between the two lowest bidders, it was prudent to renegotiate the price with Man or re-tender the three sections, he said, adding the differential cost came to Rs144 crore.
The official said Gail had in March 2008 saved Rs470 crore by re-tendering a section of the Vijaipur-Dadri-Bawana pipeline project.
Expert opinion obtained by Gail also favoured a re-tender of the three sections of the Dahej-Vijaipur pipeline.