RGPPL, Gammon spar over Dabhol contract

RGPPL, Gammon spar over Dabhol contract

New Delhi: The board of cash-strapped Ratnagiri Gas and Power Pvt. Ltd (RGPPL) plans to cancel a Rs95 crore dredging contract awarded to Gammon India Ltd (GIL) at its liquefied natural gas (LNG) terminal in Dabhol, Maharashtra, when it meets on 7 April.

RGPPL says delays in starting work have hurt its financial plans, but GIL claims the former is yet to provide it necessary clearances.

“We had awarded the project to Gammon in November 2009 and they had to submit a counter performance guarantee of around Rs9 crore. We will cancel the contract and Gammon will forfeit the Rs95 lakh earnest money deposited by it as the work is yet to begin. This delay has affected our plan," said A.K. Ahuja, managing director, RGPPL.

The LNG terminal is associated with the RGPPL-promoted 1,940MW Dabhol power project.

Natural gas is typically shipped around in liquefied form, or LNG, and is reconverted into gas at LNG terminals. The Dabhol terminal has an annual capacity of 5 million tonnes, but is yet to be operational.

RGPPL plans to lease out the terminal to companies and earn around Rs150 crore a year in user charges. But dredging is crucial for LNG ships to park at the facility.

GIL denies charges of laxity, saying RGPPL is yet to provide it with necessary permissions.

“Gammon India requested RGPPL for a copy of EC (environment clearance) to commence the work and RGPPL confirmed to provide the same to GIL. After scrutiny of the documents provided by RGPPL, GIL wrote to RGPPL that the EC provided was of 1994 and has already expired and also does not cover removal of rock by drilling and blasting. GIL requested RGPPL to take up the matter with the respective authorities at the earliest to obtain a fresh permit," Himanshu Parikh, executive director, GIL told Mint in an email interview.

He added that in the absence of the permission, GIL had not even signed a formal contract with RGPPL.

“The contract was originally envisaged for a period of five months and was supposed to be completed before the onset of the monsoons, i.e. end April 2010. Obviously, in the absence of valid...permissions, it is not possible to even commence the work, leave aside completing them," Parikh said.

But RGPPL remains firm on its stand. “The letter of award was accepted by Gammon. They had seen all clearances before submitting the bid and the remaining clearances are under the contractor’s scope of work," said Ahuja.