NMDC to terminate BHEL contract for Nagarnar steel plant

Given the inordinate delay in executing a Rs 1,400-crore project crucial for its Nagarnar steel plant in Chhattisgarh, state-run miner NMDC has decided to terminate the contract awarded to another state-owned firm BHEL way back in 2011.

The termination of the contract would further delay the commissioning of the plant, being built at a cost of Rs 15,525 crore.

According to the agreement, BHEL was supposed to complete the raw material handling system (RMHS) package in four years till February 2014. Steel ministry’s prodding and continuous follow-up by the miner yielded no results.

“The progress of work has been abysmal, and even today, after approximately 94 months since commencement of the contract, RMHS is far from completion stage. It is noted that the work of M/s BHEL is lacking intent to complete the project. BHEL is negligent towards the completion of the project,” the miner said in a statement.

NMDC said it has invoked the termination clause against BHEL and issued notice to the equipment maker on June 25 for termination of the contract. RMHS will now be completed through “new route.” A pure-play miner, NMDC had in 2009-10 conceived the Nagarnar plant with the intention of moving up the value chain and diversifying its portfolio. The idea was also to hedge itself against vagaries of iron ore prices.

BHEL