Punitive action against Reliance firm, Navy encashes bank guarantee in vessel deal
Navy has encashed bank guarantees of debt-ridden RNEL after the company overshot deadline by 4 years.
“As far as RNEL is concerned, there is no preferential treatment being given to them. His bank guarantees have been encashed by the Navy. Punitive action has been taken against RNEL. The process is moving forward,” said Admiral Lanba. Sources told ETthat bank guarantees worth over Rs 100 crore were encashed earlier this year.
Admiral Lanba, who was interacting with the media ahead of the Navy Day, said the company is facing legal trouble. “RNEL is undergoing corporate debt restructuring. They have been taken to court by their banker, IDBI,” he said.
The navy chief, however, said the contract for naval offshore patrol vessels (NOPVs) — worth over .`2,500 crore — is not being cancelled. “The contract is being examined,” he said.
The contract for NOPVs, awarded in 2011, has seen several delays over the years and is currently running four years behind schedule. In July 2017, RNEL had launched the first two patrol vessels at its shipyard in Pipavav, Gujarat. The two vessels are part of the five ships being constructed under the P-21project by RNEL.
Sources said the debt-ridden company has written to the navy, promising delivery of the first vessel by the middle of next year.
On the question of RNEL still being in consideration for the Rs 20,000-crore landing platform docks (LPDs) project, for which commercial proposals are still to be opened, the navy chief said the matter is still pending.
When contacted by ET, RNEL refused to comment on the navy chief ’s remarks.
The naval offshore patrol vessels would help in surveillance of India’s exclusive economic zone and other tasks such as anti-piracy patrols, coastal security and protection of shipping lanes.
The navy chief said private sector ship-building capacity should be harnessed and taken forward under the ‘Make in India’ initiative. He shared that two-thirds of the navy’s modernisation budget has been spent on indigenous procurement during the past four financial years. “Thirty-two ships and submarines are presently under construction in Indian shipyards. These include the aircraft carrier Vikrant, P-15B class destroyers, P17A class stealth frigates, P28 ASW corvettes, offshore patrol vessels and Scorpene class submarines. In addition, the government has granted approval for 56 ships and six submarines,” he said.
Admiral Lanba said India’s first indigenous aircraft carrier, also known as IAC-1or Vikrant, is in its third and final phase of construction at Kochi. “The sea trials are expected to commence mid-2020,” he said.