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IOC shelves Sandheads floating storage project

P. Manoj

All the three bidders had submitted conditional price bids that featured clauses that deviated from the bid conditions in view of the risks associated with the FSO project.

NEW DELHI, Nov. 8

THE long-pending floating storage off-loading system (FSO) planned by the Indian Oil Corporation (IOC) at Sandheads near Haldia port has been shelved.

With IOC remaining silent on the appeal made by the three bidders to open a dialogue on the issues raised by them while submitting the price bids, the bidders have asked the state-run oil refiner to return their bid bonds worth Rs 1.3 crore, industry sources said.

Moreover, IOC has so far refrained from seeking an extension in the validity period of the price bids submitted by the bidders — Shipping Corporation of India-

Single Buoy Moorings Inc, Great Eastern Shipping Company-Teekay Shipping and Essar Shipping-Fred Olsen — that lapsed on September 6.

"These are indications that IOC is not keen on moving ahead with the FSO project, preferring to go for a pipeline between Haldia and Paradip to evacuate the crude cargo '', the sources said. The bidders had earlier rejected IOC's request to withdraw the deviations they had sought from the bid documents while submitting the price bids, as a pre-condition for opening the bids.

All the three bidders had submitted conditional price bids that featured clauses that deviated from the bid conditions in view of the risks associated with the FSO project.

"We had submitted conditional bids as the tender clauses were very stringent, raising the risk profile of the project. The project parameters were thus seen to be non-bankable'', the sources said.

The bidders feel that the project, in its present format, would be difficult to implement and would require major changes if it is to be pursued by floating fresh tenders.

Under the innovative plan, big crude tankers would come and off-load cargo into the very large crude carrier (VLCC) moored at Sandheads as an FSO from where it would be further evacuated through dedicated daughter vessels plying between Sandheads and Haldia.

Kolkata Port Trust was keenly awaiting the implementation of the FSO project, as this would have brought several economic benefits to the port, including a quantum jump in the crude traffic at its Haldia Dock Complex (HDC) from the existing 7.29 million tonnes per annum to 15 million tonnes per annum.

Further, it would have eliminated dead freighting for mother vessels, facilitated maximum load for daughter vessels depending upon availability of draft and helped in better utilisation of single-hull crude tankers of Indian shipping companies resulting in savings on ocean freight and demurrage of an estimated Rs 134-151 per tonne.

The project would also have enabled discharge of crude loaded at FSO at other ports such as Vizag, Chennai and Kochi as well as opening up possibilities to re-export crude from FSO to neighbouring countries, particularly Bangladesh, the sources said.

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