Ircons Malaysian Fiasco: Delhi Keeps Pot Brewing

New Delhi, Nov 2: | Updated: Nov 3 2003, 05:30am hrs
New Delhi has questioned the Malaysian government move of awarding the $3.4-billion Railway contract to a local company without cancelling the letter of intent (LoI) issued to Ircon International.

Railway Board chairman and Ircon chairman RK Singh told FE that New Delhi is in dialogue with the new Malaysian Prime Minister Abdullah Ahmad Badawi who took over on Friday. Indian ambassador to Malaysia Veena Sikri is in touch with the Malaysian government on the issue and had already held dialogues with Badawi prior to his taking over as the prime minister.

A detailed meeting between Sikri and Singh took place in New Delhi on October 30 to discuss the issue.

On the Malaysian government claim that they would prefer a lower bid being offered by the the local company over the Indian and Chinese bid, Singh said it will not be proper to comment on the Malaysian bid. We have given our best bid depending on their statement of needs and requirement, he added.

He said several rounds of discussion have taken place with the Malaysian government and changes have been made more than once. He said the contract can be awarded to another company only after cancellation of LoI.

The contract has reportedly been awarded to a local consortium of Gamuda Bhd and Malaysia Mining Corporation though the LoI was issued to consortia led by Ircon International and China Railway Engineering Corporation. India was to import palm oil equivalent to the value of the contract.

Mr Singh said a high-level meeting of the Malaysian government would take place on Wednesday to discuss the project. The contract has become a major political issue in that country.

The chapter is not closed as yet. The situation would clear up in a weeks time, said Mr Singh. The contract involves double tracking 350km railway line of the northern and southern portions of the multi-billion dollar project being undertaken by KTM Berhad (Malaysian railways). It stretches across the entire Malaysian peninsula and forms part of a $30-billion (5,500km) rail line running from Singapore to Kunming in southern China.

The companys viewpoint has been communicated to the Malaysian government, he said. The Malaysian government is discussing the issue because they have appreciated our viewpoint to some extent. Sources said that the Railways had also approached the Prime Ministers Office earlier for taking up the issue with the Malaysians.

A register of statement of palm oil sales to India was opened in January since the payment for the contract was to come in the form of palm oil, said an official. Palm oil against the contract was to come over a period of five years. Palm oil constitutes about 75 per cent of Indias total edible oil imports of $1.8 billion. Most of this palm oil is imported from Malaysia.