Navy takes punitive action against Anil Ambani’s Reliance Naval Engineering, encashes bank guarantee in vessel deal

New Delhi: In a punitive action, the Navy has encashed a bank guarantee of Reliance Naval Engineering Ltd (RNEL) in the Rs 3,000-crore contract for five offshore patrol vessels due to long delays in their supply, and said on Monday that the deal is being examined.

“There is no preferential treatment being given to RNEL. Its bank guarantee has been encashed. Punitive action has been taken against it. The process is being taken forward,” Navy Chief Admiral Sunil Lamba said at a press conference.

The Navy chief was asked about the huge delay in delivery of the vessels by RNEL and whether the Navy is under any pressure to not initiate any action against the company. Admiral Lamba said the deal is not being cancelled at the moment, but added that it is being looked into, indicating that government may take a call on the issue. “It has not been cancelled at the moment but the contract is being looked at and is being examined and what we need to do with it,” said the Navy chief. [caption id=“attachment_3733659” align=“alignleft” width=“380”]  Anil Ambani, chairman of the Reliance Anil Dhirubhai Ambani Group, Reuters[/caption] The Navy chief also said that the company is undergoing corporate debt restructuring. There was no immediate reaction from RNEL about the Navy chief’s comments. Anil Ambani’s Reliance Defence has been at the centre of a controversy over the Rs 58,000-crore Rafale jet fighter deal. The Congress has accused the government of favouring the company. The company as well as the government have rejected the charges. The original contract for the five naval offshore patrol vessels (NOPVs) was won by Pipavav Defence and Offshore Engineering in 2011. The company was bought over by Anil Ambani group in 2016. Sources said the bank guarantee was 10 percent of the size of the contract. According to the original contract, the first vessel was to be delivered by early 2015. However, the deadline was pushed several times. Two patrol vessels — ‘Shachi’ and ‘Shruti’ — were launched at the Reliance shipyard in Pipavav, Gujarat, last year. RNEL was the first private sector company to obtain the licence and contract to build the patrol vessels. The vessels were to be armed with 76mm Super Rapid Gun Mount (SRGM) system. The primary role of NOPVs is to undertake surveillance of the country’s vast Exclusive Economic Zone (EEZ) besides operational tasks such as anti-piracy patrols, fleet support operations, maritime security of offshore assets and coastal security operations.