New Delhi, Dec. 6: State-run Bharat Sanchar Nigam Limited has cancelled an equipment purchase order given to Chinese firm Huawei because of unacceptable conditions imposed by the vendor.

The development is the latest in a line of problems plaguing its massive Rs 32,000-crore project to install 93 million GSM lines.

Earlier, BSNL had to confront the home ministry, who had issued a directive against engaging Chinese equipment makers in building networks in the border areas.

Besides, Nokia-Siemens had taken the PSU to court for not hiring the company as a vendor.

Home ministry opposition had prompted BSNL to choose Huawei for installing 20 million GSM lines in the south, a region without an international border.

According to sources, BSNL’s extreme step comes in the wake of the Chinese vendor’s conditional supply of equipment.

The Huawei spokesperson declined to comment.

“There was no scope for accepting conditions as the order was placed after detailed negotiations and as a government-owned firm we do not accept conditions,” a senior BSNL official said.

The official, however, declined to comment on the conditions.

The PSU is negotiating with another vendor, Ericsson, for the northern and eastern regions but is yet to finalise the orders.

Sources said BSNL was weighing multiple options, including going for a fresh round of bids. The company, however, denied the possibility.

A delay in installing the lines means BSNL will cede ground to private rivals, officials said.

BSNL chairman and managing director Kuldeep Goyal had said last month that the company was in advanced stages of negotiations with Ericsson for the north (25 million) and east zone (18 million).

BSNL had chosen the bids of Ericsson and Huawei, while rejecting the offers of Nokia Siemens, ZTE and Alcatel Lucent.

Nokia-Siemens had challenged the decision and a final verdict is pending in the court.