New Delhi: State-owned SAIL has terminated a Rs2,000 crore order given to a Posco unit for constructing a blast furnace at Bhilai Steel Plant, as the South Korean firm failed to sign contract despite several reminders.
Posco E&C last year won a bid to construct a blast furnace on EPC (Engineering, Procurement and Construction) turnkey basis for SAIL’s Bhilai Steel Plant which is working to double its production capacity.
The subsidiary of steel behemoth Posco delayed the signing of the pact despite repeated reminders and thus SAIL’s board on 19 June decided to terminate the offer.
Posoco E&C officials could not be contacted immediately.
SAIL will now go for retendering for the supply of the blast furnace to the Bhilai unit.
Confirming the development Steel Secretary P K Rastogi told PTI that “SAIL in a recent board meeting decided to cancel the offer made to Posco E&C for the construction of a blast furnace and supply of necessary equipment to the Bhilai Steel Plant (BSP). The company will float a new tender now.”
Last year in February, the South Korean firm had said that it has won a $400 million (about Rs2,000 crore) order to construct a blast furnace for BSP. The contract was a costly proposition for SAIL in the light of heavy correction in the equipment rates on account of the economic crisis, the secretary said.
The steel maker is likely to get cheaper deal in the new tender. This may help it to reduce cost of expansion, which is at present pegged at Rs55,000 crore.
“SAIL will definitely see cost of expansion going down. By more such steps the cost would further go down,” Rastogi said.
Steel minister Virbhadra Singh had earlier said that recession should be taken as an opportunity by procuring services of global leaders in engineering and construction activities at a cheaper rate.
The country’s largest steel producer SAIL has lined up massive capacity addition programme for five of its integrated steel plants to take its overall annual production capacity to 26 million tonnes from the present 14 million tonnes.
Bhilai Steel plant is undertaking about Rs12,000 crore expansion programme to double its production capacity to around 3 million tonnes per annum.