Steel Authority of India (SAIL) is considering a ban on some Chinese contractors in its future projects after its poor experience with these companies, two people familiar with the development said.

 

India's largest steel producer has seen delays in project implementation and cost overruns after it invited three Chinese companies—CISRI, Dalian Huarui and Beijing Sino Steel—in the expansion projects of its offshoot, IISCO Steel Plant.

 

The board will soon take up the issue and may "blacklist such defaulting Chinese firms", a steel ministry official said, requesting anonymity. The government-owned firm is under the administrative control of the steel ministry.

 

According to a SAIL executive, the Chinese companies delayed commissioning of their respective projects by around 12 months on "flimsy grounds". "Besides, communication has been a big problem with them," the executive, who wished not to be named, said.

 

SAIL is investing more than Rs 60,000 crore in expanding its hot metal capacity from 14.6 million tonne to 23.5 million tonne by 2012.

 

"Working with Chinese contractors had been a learning experience for us and we would not like face the same problem in any other projects," the SAIL executive added.

 

While there may not be a blanket ban on Chinese firms in any of SAIL's modernisation and expansion projects, the company may device a mechanism to blacklist inefficient contractors from that country. "The SAIL board may ask for a performance report of existing expansion projects and take a decision based on it," the official said.

 

SAIL is under pressure from the government to complete its expansion projects by 2012.

 

However, "Chinese contractors have played spoilsport resulting in numerous delays in the expansion of Burnpur-based IISCO unit. This has forced us to think whether to restrict the participation of Chinese contractors", the SAIL executive said.

 

SAIL's woes with Chinese contractors comes close on heels of similar problems faced by several power projects that have ordered equipment from companies from that country.

 

Indeed, only last year, the Central Electricity Authority (CEA) had conducted an audit of Chinese power equipment and raised several questions over their reliability.

 

12 Sep 2009, ET Bureau