The largest contract ever to be awarded to an Indian company is on the verge of being held up, perhaps, indefinitely, thanks to the delay on the part of the awarder - the Government of Malaysia.
Malaysia, in 2001, had awarded Ircon International Ltd, the Railway PSU, a RM12 billion contract for the 350-km double tracking railway line in Malaysia.
According to company officials, Ircon is yet to receive the 'statement of need' from the Transport Ministry of the Government of Malaysia. This document specifies the broad technical parameters and contract conditions for the project. Once Ircon receives the document it can commence work by mid-2003. Ircon's 27 workers based in Malaysia are carrying out field surveys and data collection. The PSU has estimated a period of five-six months for acquisition of land by the Malaysian government.
Meanwhile, Ircon International along with Exim Bank of India is negotiating with several banks for funding the construction of the project. A consortium of about 20 banks are interested in pooling in their resources with tranche disbursements spread over three-five years. As per the contract with the Malaysian government 80 per cent of the cost of the project must be brought in by Ircon and the rest by the Malaysian government.
Malaysia has agreed to parcel out the project to Ircon and a Chinese consortium
Double tracking refers to the construction of a new track parallel to the existing one to enable uninterrupted two-way train traffic.
Ircon, a state-run engineering and construction firm, will undertake double-tracking and electrification works for the northern grid spanning 338.8 km that links Ipoh with Padang Besar. The parcel is estimated to be worth RM6 billion.
The agreement for the project was supposed to have been signed last December but was delayed due to various reasons. One is the complexity of the project and the barter deal India has entered into as compensation for executing the project. India is to receive palm oil worth the project cost over a period of five-six years. The fluctuating price of the commodity has complicated the process of estimating how much would be required to finance the project.
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