NMDC invokes termination clause against BHEL for delay in Rs 1,395 cr contract

State-owned miner NMDC has issued a termination notice to engineering firm BHEL as the latter has not been able to complete a Rs 1,395 crore contract awarded in 2011, according to a source. The completion date of the work was February 28, 2014.

Maharatna PSU BHEL, in 2011, had bagged the Rs 1,395 crore contract from the country's biggest miner for handling raw material at its steel plant in Nagarnar, Chhattisgarh. "NMDC has invoked termination clause against BHEL in RMHS (raw material handling system) package of Nagarnar," the source, who did not wish to be named, told PTI.

NMDC CMD N Baijendra Kumar has confirmed the development. A notice has been issued to Bharat Heavy Electrical Ltd (BHEL) as they were not expediting the work even after several rounds of meetings at the ministry level, he said.

"NMDC has invoked the termination clause against BHEL by giving notice to BHEL on June 25, 2019, for termination of the contract. NMDC will take steps for completion of the project through a new route," the source said. The raw material handling system package (Pkg-01) was awarded to BHEL on August 1, 2011, at a cost of Rs 1,395 crore, he said, adding that original date of completion was February 28, 2014. There is a huge delay of more than five years in completion of this package.

"Even after continuous follow up at NMDC and at the ministry level, BHEL is not accelerating the progress of the project. The progress of work has been abysmal, and even today, after approximately 94 months since the commencement of the contract; the raw material handling system is far from completion stage," the source added. BHEL was to set up the raw material handling system package for NMDC's three million tonnes per annum steel plant at Nagarnar in Chhattisgarh on a turnkey basis.

The contract was signed in the presence of then BHEL CMD B P Rao and then NMDC CMD Rana Som. The project includes engineering, procurement and construction of complete RMHS, from receipt of various raw material (coal, iron ore etc) from wagon tippling to crushing.

The contract also included installation of conveyor length of nearly 30 kms.