The Indian Navy has encashed bank guarantees of Reliance Naval Engineering (RNEL) following delay in supplying Project 21 Offshore Patrol Vessels (OPVs) by over four years.
RNEL has an order to supply five offshore patrol vessels (OPVs). Addressing the annual Navy Day press conference, Indian Naval Chief, Admiral Sunil Lanba responding to a question on whether action had been taken against Reliance Naval for the late delivery of the OPVs said, “There is no preferential treatment being given to RNEL. Its bank guarantees have been encashed by the Navy, so punitive action has been taken against RNEL”.
Admiral Lanba, who was interacting with the media ahead of the Navy Day, said the company is facing legal trouble. “RNEL is undergoing corporate debt restructuring. They have been taken to court by their banker, IDBI,” Economic Times quoted Lanba as saying Monday.
The navy chief, however, added that the deal had not been cancelled “at the moment” and that the contract was being “examined” for what steps could be taken next.
The contract for NOPVs, awarded in 2011, has seen several delays over the years and is currently running four years behind schedule. In July 2017, RNEL had launched the first two patrol vessels at its shipyard in Pipavav, Gujarat. The two vessels are part of the five ships being constructed under the P-21project by RNEL.
Sources said the debt-ridden company has written to the navy, promising delivery of the first vessel by the middle of next year.