Reliance Naval urges govt to fast-track maritime security contract awards

The Anil Ambani-led group company said there are 13 programmes worth Rs 500 billion from the Indian Navy and Indian Coast Guard that have remained at the Request for Information stage for a long

Voicing its concerns over delay in awarding contracts for maritime security programmes, Reliance Naval and Engineering (RNEL) has urged Defence Minister Nirmala Sitharaman to fast-track the process.

In a letter to Sitharaman, the Anil Ambani-led group company said there are 13 programmes worth Rs 500 billion from the Indian Navy and Indian Coast Guard that have remained at the Request for Information (RFI) stage for a long time and the entire process needs to be fast-tracked.

When contacted, a Reliance Group spokesperson declined to comment.

Sources said RNEL expressed its full commitment to contribute to the maritime security of the country by private sector participation in the defence sector as well as to promote the Prime Minister's 'Make in India' and 'Skill India' initiatives.

The Indian Navy had sought RFI for 10 projects, which included four multi-purpose support vessels, six new generation missile vessels, six high-speed landing craft and one survey training vessels, among others.

Besides, the Indian Coast Guard had sought RFIs for eight fast patrol vessels, six air cushion vehicles and two pollution control vehicles, among others.

The RFIs for these 13 programmes were issued between November 2014 and February 2018, with the first being issued by the navy for multi-purpose support vessels.

According to sources, RNEL has told the ministry that the company and other shipyards, including public sector entities, had submitted RFIs for these 13 programmes but no progress has been made so far.

"There has been an inordinate delay in converting the RFIs, and not even one RFI has been converted to RFPs for issuance for competitive bidding process as per Defence Procurement Procedure (DPP) 2016," the letter said.

Once the RFI is issued, it takes an average 18 months for the issuance of Request for Proposal (RFP), six months for bid submission, three-and-a-half years for commercial bid opening and 18 months for the contract signing, the company stated.

"It roughly takes 7-10 years from issuance of RFI to contract signing, and therefore, there is an urgent need to review and fast-track this process," it said.

Further, the letter said there are Rs 1.76 trillion worth of naval and coast guard projects that have been awarded to four defence PSUs on a nomination basis and are already facing huge time and cost overruns.

"Due to this nomination process the private sector, namely, Reliance Naval and Larsen and Toubro (L&T) have been denied any opportunity to participate actively in defence shipbuilding program," the company claimed.

Due to this, the capacity utilisation of RNEL and L&T has come down to single digits and both shipyards face bleak future financially, the letter said.

RNEL also said the last three competitive bids, awarded in 2017 worth Rs 150 billion, were awarded to PSUs due to extremely low prices quoted by them compared to the private sector, which needs to factor in the cost of their debt servicing and production facilities.

The company urged the defence minister to award the programs through an open, fair and competitive process, with a level playing field for the private sector.