Mazagon Dock-Pipavav Shipyard naval project in selection controversy

New Delhi: The controversy over Mazagon Dock's choice of Pipavav Shipyard as its naval joint venture partner is snowballing into a big controversy, as after ABG Shipyard and Larsen and Toubro (L&T), another bidder Bharati Shipyard, has also raised questions over the selection process.

Seeking clarity on the issue, Bharati Shipyard in its letter, dated September 16, to MDL said that it has made a presentation on the proposal to form a JV with MDL on 23 August and was asked by the defence PSU two days later to provide further details and terms of reference for the formation of JV.

[caption id="attachment_89235" align="alignleft" width="380" caption="Indian Naval Ship. Image courtesy Indian Navy"][/caption]

"Subsequently, there were media reports on 10 and 11 September that MDL has already selected the JV Model of partnership and Pipavav Shipyard as one of their partner.

"We would, therefore, be grateful if you could kindly clarify the above and as to the date by which date we, i.e, Bharati Shipyard, should submit our proposal for joint venture," the company said in the letter, dated 16 September.

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Last week, L&T and ABG Shipyard had questioned the selection process, while pointing out the lack of transparency over the selection of Pipavav Shipyard as Mazagaon Dock Ltd's (MDL) JV partner.

In their separate letters to Mazagon Dock, both the companies had said that they were not given chance to respond to the proposal of becoming the JV partner despite making presentations and submitting their expression of interest (EoI).

Both the companies had also requested the defence PSU to reconsider its decision and forwarded a copy of their letters to Defence Secretary, Defence Production Secretary and Chief of Naval Staff.

Besides this, the two companies pointed out that neither any guideline nor any specific time line was mentioned for submitting the JV proposal.

The controversy arose following an announcement of Pipavav Shipyard on 12 September, that it has been selected by the MDL as its equal joint venture partner for construction of warships and submarines among others.

The move would be the first example of public-private partnership in the defence sector.

Officials of MDL were not available for comment on the issue.

In March this year, Mazagon Dock had issued an EoI, seeking to form a strategic partnership with Indian private sector shipyards as its joint venture partner "to build and deliver warships of the highest quality to the Indian Navy".

Following the responses of various companies, officials of the MDL, including its directors, also visited the private shipyards to evaluate their capability and shortlisted four firms --Pipavav, L&T, ABG and Bharati Shipyard for its proposed joint venture.

On 23 August, the shortlisted firms made their individual presentation and proposed their business plan and joint strategies and two days later, on 25 August, Mazagaon Dock sent letters to the four companies, seeking details of the JV and their proposed business plans.

Subsequently, on 9 September, the MDL board decided to form the JV with Pipavav Shipyard.

The EoI, floated by Mazagaon Dock, was based on the government's earlier decision of opting for PPP route for four government shipyards-MDL, Cochin Shipyard, Hindustan Shipyard and Garden Reach Works in Kolkata-for execution of the order book of the respected companies.

PTI