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Jindal Steel and Power Ltd intends to exit its $2.1-billion project in Bolivia, the company said on Saturday.
“Jindal Steel Bolivia, a subsidiary of JSPL, sent a letter to the Bolivian Government on June 8 conveying its intension to terminate the contract for investment of $2.1 billion due to non-fulfilment of the contractual obligations on the part of Government of Bolivia,” the company said in a statement.
The company also said that the Bolivian Government has encashed a bank guarantee of $18 million in March 2010 and $18 million on May 1 this year on ‘flimsy and legally untenable' grounds.
Natural gas supply
According to JSPL, Bolivia has not signed an agreement for supply of natural gas to the company's project.
It was to sign an agreement for supply of 10 million cubic metres a day (mcd) within 180 days of signing of the project contract.
“The Government of Bolivia is now willing to commit only 2.5 mcd of gas from 2014 onwards due to non-availability of gas in the country, whereas the company is being asked to make investment as per capacities originally envisaged under the joint venture contract,” the statement said.
Not enough land
At the same time, Bolivia has not provided enough land for the project until 2010, and that has delayed the project, it said.
Jindal Steel and Power Ltd said that it has up offices and deployed manpower soon after entering into a contract with Bolivia in 2007.
It has invested more than $90 million on this project and has made commitments to invest an additional $ 600 million till March 2012 for purchase of technology, machinery and other equipment and advances to vendors, it said.
In 2007, the company inked a contract with Bolivia targeting to invest $2.1 billion for iron ore mining, pelletisation (10 million tonnes annually), direct reduced iron (6 million tonnes every year) and steel making (1.7 million tonnes each year).
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