Exim Bank to reply on Ethiopian sugar contract Thursday

September 17th, 2008 - 4:22 pm ICT by IANS  

New Delhi, Sep 17 (IANS) The Export Import Bank of India (Exim Bank) will file a reply in the Bombay High Court Sep 18 after the court stayed it from releasing funds to the Ethiopian government through lines of credit.In a ruling Sep 9, the Bombay High Court barred the Exim Bank from dispersing $640 million through credit lines in favour of the Ethiopian government for setting up sugar mills in the African nation.

The ruling came after Uttam Sucrotech International, which owns several sugar mills, filed a petition saying Exim Bank’s tendering process was non-transparent and that it had favoured Overseas Infrastructure Alliance, one of the bidders for the project.

The Indian government offers lines of credit to trading partners among developing countries to import Indian equipment, technology projects, and goods and services on deferred credit terms.

These credit lines enable the recipient countries to set up developmental projects in variety of sectors including sugar, Uttam Sucrotech’s area of interest.

An Ethiopian company, Tendaho Sugar Factory Projects (TSFP), floated a tender inviting bids to design, manufacture, supply and deliver a single turnkey project for five packages that was financed by an Exim Bank credit line.

Uttam Sucrotech and Overseas Infrastructure Alliance were among the 10 bidders for the tender for five packages for setting up juice extraction plant, steam generation plant, power generation plant, process house plant and electrical work.

“There has been material alteration in the terms of bidding after the bidding process was over in that there was no condition of appointment of single EPC (engineering, procurement and construction) contractor in the notice inviting tender (NIT),” the petitioner has alleged.

The petition said Tendaho wrote to Uttam Sucrotech only after the bidding was over to say: “As per the requirement of Exim Bank, we will be required to appoint a lead EPC contractor and other awarded contractors would automatically become sub-contractors to the lead EPC contractor”.

Overseas Infrastructure, engaged in development of project infrastructure, attained the position of the lead contractor and Uttam Suctrotech was selected as the ’sub-contractor’ for the juice extraction package and power generation package.

The petition said though the tender for these two packages was bagged by Uttam Sucrotech, the deal went to Overseas Infrastructure despite the fact that it did not even bid for either of the packages.

Moreover, the petition said, Overseas has asked Uttam Sugar to reduce the price of its contract by 15 percent, which would be required to be paid to Overseas to discharge its obligation of single EPC contractor, failing which Uttam Sucrotech would be replaced by a new sub-contractor.

In the first hearing Sep 9, Exim Bank in its reply to the court said “it is not concerned with what and how the borrowers conduct themselves”.

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