NTPC to settle contract row with Technoprom

NTPC to settle contract row with Technoprom
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First Published: Fri, Dec 19 2008. 01 15 AM IST
Updated: Fri, Dec 19 2008. 05 15 PM IST
New Delhi: Under pressure from Russia, India has relented on a contractual dispute between NTPC Ltd and Russia’s Technoprom Export (TPE), over the supply of boiler for a coal-fired power plant in Barh, Bihar.
Russia had linked the contract resolution to India’s request for a stake in the Sakhalin-3 oil field. The diplomatic stakes eventually took precedence over the contractual dispute even though the deal itself is being investigated by Interpol and the Central Bureau of Investigation for alleged bribes paid to secure boiler supply contract.
“Political signals have been given from both sides to start talking and start settling the dispute,” a minister in the Congress-led United Progressive Alliance government, who didn’t want to be named, said. “This development followed the visit of Russian President Dmitry Medvedev. The Russian team is in town to resolve the contractual dispute. The first steps have already been taken and we believe something will come out of this within a month.”
The Technoprom saga involves the Rs8,700 crore Barh power project that started in 1999. The Russian firm got a contract for the supply of boilers to the much-delayed project in February 2005. However, work on the project stalled after a contractual dispute between NTPC and Technoprom, with the Russian firm demanding more money, citing higher steel prices. The thaw in the standoff comes even as “NTPC has refuted TPE’s claim as the same is not justified and accordingly not tenable”, according to the power ministry communication to the Prime Minister’s Office.
NTPC executives insist they are only in “discussions and not negotiations. “We have started discussions with the Technoprom team,” said a top NTPC executive who didn’t want to be named. “Even the adjudicator Anil Dev Singh has asked for discussions. If this is not permitted, we have to go for arbitration, which is, anyway, a long-drawn process... This does not mean that we have agreed to anything. We will go by our contract, the value of which is around Rs2,066 crore.”
Technoprom has raised the issue of extending the time and removal of price variation ceiling of 20%, attributing delays in engineering, issues involving amendments about legal status, and site-related issues.
NTPC could lose around Rs1,700 crore if it agrees to Technoprom’s demands. A senior Indian power ministry official, speaking on condition of anonymity, said, “NTPC is negotiating with Technoprom as the blame is on either side.”
Mint first reported on 24 November that Russia linked this payment to India’s request for a stake in Sakhalin-3. Russia’s position on the deal was made clear when petroleum minister Murli Deora met Russian Prime Minister Vladimir Putin.
utpal.b@livemint.com
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First Published: Fri, Dec 19 2008. 01 15 AM IST