THE Chairman and Managing Director of Shipping Corporation of India, Mr S. Hajara, believes that the Petronet LNG bid is substantially lower than their previous bids.

He further adds that the Petronet LNG contract will begin in 2009. He also says that there is a three per cent escalation clause, which is for operational expenses.

Excerpts from CNBC-TV18's exclusive interview with Mr Hajara:

How much was the revised bid lower than the earlier one?

As far as our bid is concerned, it was substantially lower and I won't be able to give the exact figures, but yes it was substantially lower because in the earlier bid as per the government policy, it had to be done with the Indian flag and the Indian flag does have taxation built in. For the foreign flag, obviously we will bid from one of the tax havens and the ship will be registered in one of the tax havens. So, definitely the bid is substantially lower than our previous bids.

When does the contract start?

The contract will start in 2009 because that is when the next 2.5 million tonnes of LNG will be imported by Petronet from Qatar to Dahej.

What is the yearly revenue that you gain from this?

We will have to calculate that, the charter is higher than $72,000, it is nearly $73,000, I don't have the exact figures but it is nearly $73,000 per day. We will have to multiply that by 365 to get the yearly-chartered revenue.

Could you confirm the size of the deal and within this consortium, how much would SCI hope to garner, and will you have to put an escalation clause into this project as well?

Yes, there is escalation clause because in the charter there are two elements - one is the capex that covers the financial cost or capital cost which has no escalation, and the other, the operating cost, which is called the opex, has an escalation clause of three per cent.

Can you give us a sense of whether these rates that you have set out for these deals are substantially lower than the existing rates or the rates at which SCI has struck deals in the past?

No, it is actually higher than the existing rates because in those days the ship prices used to be far lower than what they are today.

I won't get into the exact numbers, but the ship price was to be somewhere around $160 million then and now the ship price is well above $200 million.

So, obviously the rates that we have given this time are higher than our existing rates but that is the factor of ship building price.

Your existing rate is of $68,900. Is that right?

Yes that is right.

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