Coal India in a fix over its tender to buy dumpers

Pratim Ranjan Bose Kolkata | Updated on February 18, 2011

Coal India Ltd's proposal for purchasing 56 dumpers of 190 tonne capacity each has been caught in a conflict between ‘procedure' and costs that are higher than vehicles with even larger capacity. Dumpers are primarily required in removing earth and exposing coal seams for open cast mining.

Sources say that the problem cropped up as CIL wanted L&T-Komatsu combine, the lowest tenderer (L1), to lower its quotes for 190 tonne dumpers - inclusive of 11 year maintenance and repair contract (MARC) - below the levels of a recently awarded contract for supplying 240 tonne dumpers. The previous contract was won by to Bucyrus of US at Rs 24 crore for each 240 tonne dumper.

CIL's intention was to extract the best price from the bidders and it was assumed that the 240 tonne dumpers should cost more than the 190 tonne ones.

However, the L&T-Komatsu combine did not agree to reduce its prices from the quoted levels of approximately Rs 29 crore (including MARC) to below Rs 24 crore for each dumper.

To further complicate the situation Ultra Max- BelAZ combine has officially offered to reduce the prices below Rs 24 crore for each 190 tonne dumper, down from its original quote of Rs 37 crore each. A major global supplier of earth movers BelAZ is trying to re-enter the Indian market which it had lost during the disintegration of the erstwhile Soviet Union.

The re-tendering will further delay the company's objective to modernise its open cast equipment to increase production, by at least a year or two. What is more important, considering the inflationary pressure CIL may end up buying the same equipment at a higher price (if re-tendered) - all for the sake of procedure!

The situation has put CIL authorities in a fix. “It is a tricky situation. If we go ahead and accept BelAZ's offer, we may be held responsible for violating rules, once set to ensure transparency in awarding contracts. On the other hand, if we invite fresh tenders so as to be on the fair side of rules and regulations, our decision may prove to be costly to the company, in all senses of the term,” a CIL source told Business Line.

The net impact is: after more than 14-15 months since initialising the last tendering process and nearly three years since the procurement was originally conceptualised (by different mining subsidiaries of the company) CIL is no closer to procuring the equipment.

Published on February 18, 2011

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