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Bone of contention
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June 9 (Agencies): Jindal Steel & Power Ltd (JSPL) today said it was making plans to scrap a $2.1-billion project in Bolivia, saying the Bolivian government had not met contract terms that include supply of natural gas for the plant.
The steel and power producer said it had served its “intent to terminate the contract” and the Bolivian government had 30 days to resolve the issues, failing which JSPL could terminate the contract within 7 days thereafter.
“In case the government of Bolivia comes out clean and informs as to how much gas it can actually supply and agrees to reconfigure the plant capacity and investment and amend the contract JSPL can consider staying back,” a Jindal Steel statement said.
Jindal Steel had signed a pact with the Bolivian government in 2007 to invest $2.1 billion in iron ore mining and steel making. The company said it was the single-largest foreign investment in the country.
According to the contract, Bolivia was to sign an agreement to supply 10 million cubic metres per day (mcd) of natural gas, Jindal Steel said, adding the pact had not yet been signed.
However, the government of Bolivia is now willing to commit only 2.5 mcd of gas from 2014 because of non-availability of gas in the country, the statement said, adding that the company is being asked to make investments according to 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.
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