NEW DELHI: The joint venture between Mazagon Docks Ltd (MDL) and Pipavav shipyard would not enjoy any preferential treatment, nor would it receive any contract on nomination basis from MDL.
The ministry of defence (MoD) sources on Tuesday clarified that the JV "will not be given any special privileges" and would not get any "backdoor entry". This means that the JV would not be given any "orders on a nomination basis". A senior MoD official said even when MDL "has to offload work it has to be done through competitive bidding".
However, the JV can jointly bid for any of the contracts from the MoD, he said.
The MoD clarification means that the much-touted JV would be just another company, and would not enjoy any special status. Nor would it benefit from the about Rs 100,000 crore ship-building contracts that MDL is expecting from the Navy and the Coast Guard over the next two decades.
The JV had been mired in controversy because of various allegations regarding its formation not following norms governing formation of JVs between defence PSUs and private companies. The MoD carried out an inquiry based on media reports, complaints from other private shipyards and others.
The new guidelines for the JV are based on MoD inquiry's findings, sources said.
Hence, the original intention behind the proposal to set up JVs between defence PSUs and private companies as a means to offload work pending with the DPSUs has been defeated. Sources said the same rules would govern all other JVs that MDL will now ink. Larsen & Toubro and ABG Shipyard are among those who have been discussing similar JVs with MDL.
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