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Petronet eases force majeure clause for shipping deal

P. Manoj

NEW DELHI, Nov. 22

PETRONET LNG Ltd has brought the force majeure clause for its proposed LNG shipping deal to global levels by agreeing to pay the normal charter hire rates to the shipowners and operators during the period when force majeure is in force.

A decision to this effect has been communicated to the bidders through an addendum to the bid documents, Government sources told Business Line. The easing of the force majeure clause was issued hardly 10 days before the November 30 deadline for the submi ssion of techno-commercial and price bids by the bidders.

The original bid documents had said that Petronet will not pay any charter hire rates to the shipowners and operators during force majeure, sparking off strong protests from the bidders against such a restrictive clause.

According to the amendments made to the force majeure clause, Petronet has agreed to pay the normal charter hire rates to the shipowners and operators during force majeure. ``Petronet will not be relieved of its responsibility to pay charter hire rates d uring force majeure events,'' the sources said.

Moreover, if the force majeure events persist for three months or more, both the shipowner/operator and Petronet will sit together and work out ways to mitigate the loss caused to them.

If force majeure events last for a year or more, Petronet will have the right to terminate the contract with the shipowners and operators by giving a notice period of three months as per the amendments made in the force majeure clause.

The bidders have welcomed the relaxation in the force majeure clause saying that it was a step in the right direction. ``This will definitely improve the bankability of the bid document and the LNG shipping deal, besides enabling the bidders to secure be tter financing terms and conditions from the bankers,'' an official with one of the shortlisted consortia told Business Line.

Petronet has also reduced the validity period for ship yard quotation and bankers' guarantee on bid bonds (worth about Rs 4.6 crore) by 15 days. The validity period will be 165 days instead of 180 days for ship yard quotation and 225 days instead of 240 days for bid bond guarantees by bankers.

The validity period has been reduced to free the bidders from seeking extension in both these cases following a 15-day extra time allowed by Petronet for the submission of techno-commercial and price bids.

Petronet is close to selecting the shipowner and operator from whom it will hire two LNG tankers of 1,38,000 cu.m capacity each on time charter basis for transporting five million tonnes per annum of LNG purchased from Qatar's RasGas on free-on-board (f. o.b) basis for a period of 25 years for its regasification terminal at Dahej in Gujarat.