Jindal Steel Bolivia, an arm of Jindal Steel & Power, today said it may abandon its investment plan of $2.1 billion (around Rs 11,550 crore) in Bolivia for setting up a steel plant due to non-fulfilment of contractual obligations by the South American country.
"Jindal Steel Bolivia has sent a letter to Government of Bolivia, 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 Bolivian government," the company said in a statement.
Jindal Steel & Power Ltd (JSPL) had signed a joint venture contract with the government of Bolivia, in 2007 to invest $2.1 billion for setting up an integrated steel plant of 1.7 million tonne per annum capacity, including ore mining, pelletization (10 million tonne per annum) and DRI (6 million tonne per annum).
As per the contract, Bolivia was to sign an agreement for supply of natural gas required for the project --10 million cubic meter per day (MCD) within 180 days of signing of the contract.
The same has not been signed till date, JSPL said in the statement.
However, the government of Bolivia is now willing to commit only 2.5 MCD of gas (as against total requirement of 10 MCD) from 2014 onwards due to non-availability of gas in the country, it said, adding that the company is being asked to make investment as per capacities originally envisaged under the contract.
It added the Bolivian government did not provide substantial land for the project until 2010 and, therefore, work on the project could not start early.
Till date, full land required for the project has not been provided by them.
According to the terms of joint venture contract, we have served our intent to terminate the contract and Government of Bolivia has 30 days time to resolve the issues failing which JSPL can terminate the contract within 7 days thereafter, it added.
In case the government of Bolivia comes out clean and informs as to how much gas it can actually supply and agrees to reconfigure plant capacity and investment and amend the contract, JSPL can consider staying back and continue investing in Bolivia, it further added.
