Mazagon-Pipavav JV project on hold

Mazagon-Pipavav JV project on hold

Mumbai/Bangalore: The defence ministry has put on hold a planned joint venture between state-run Mazagon Dock Ltd and Pipavav Defence and Offshore Engineering Co. Ltd to build warships after rival companies said the selection of Pipavav lacked transparency.

The ministry has also decided to formulate a policy for such partnerships between defence shipyards and private shipbuilders to meet rising demand for warships from the Indian Navy and the Coast Guard.

“The ministry had decided to put on hold the joint venture of Mazagon Dock till a policy on joint ventures is put in place by the government," defence minister A.K. Antony told members of a parliamentary consultative committee meeting on Monday.

Antony said his ministry will study the complaints received from some private shipyards regarding the joint venture between Mazagon and Pipavav that was announced by the private yard earlier this month.

“The issue needs to be fully examined and settled before any forward movement takes place on this front. He also said that joint ventures must compete for contracts and should not get them on nomination basis," a defence ministry statement quoting Antony said. “We are treading on a new path and we would like to ensure that transparency is maintained at all levels."

Mazagon has an order book valued at some 1 trillion, accounting for about 85% of the order book of four state-owned defence shipyards. The other three state-run defence shipyards are Goa Shipyard Ltd, Hindustan Shipyard Ltd and Garden Reach Shipbuilders and Engineers Ltd. Pipavav’s rivals such as Larsen and Toubro Ltd, ABG Shipyard Ltd and Bharati Shipyard Ltd have questioned the selection process adopted by Mazagon and had asked the government to review the deal.

“We have no information regarding any action taken in this matter by the ministry of defence," H.S. Malhi, chairman and managing director of Mazagon Dock, said in an emailed response.

Local private shipbuilders are banking on government-funded defence orders to tide over a slump in commercial shipbuilding globally as an oversupply of ships, rising costs and a shaky global economy force fleet owners to defer buying new vessels.