Bengaluru Metro's contract with Chinese firm runs into trouble

Bengaluru: The contract between the Bengaluru Metro Rail Corporation Limited (BMRCL) and China's CRRC Corporation Ltd's subsidiary -- Nanjing Puzhen Co. Ltd -- of supplying 216 metro coaches at a cost of Rs 1,578 crore has run into problems. The BMRCL is getting ready to act on the inordinate delay in the supply of coaches, according to Karnataka government sources.

The contract for manufacturing 216 coaches was awarded to the Chinese firm in December 2019 as it won the bid. The firm got the contract as it asked for nearly Rs 200 crore less than the nearest competitor.

However, the supply of coaches to BMRCL has been delayed as the Chinese firm is said to be finding it difficult to find local partners for the process of assembling, testing and commissioning them.

The BMRCL has issued several notices to the Chinese firm and also warned that if the supply is not made, it would encash its bank guarantee of Rs 372 crore, sources said.

As per the tender agreement, the Chinese firm will have to manufacture 94 per cent of the coaches in India as per the Union government's 'Make In India' policy. BMRCL sources say that the Chinese company has not been able to tie up with local manufacturing units.

The Chinese company has offered to manufacture all the coaches in China but the offer has been rejected by BMRCL. The new coaches are being planned to be used in purple and green lines and new metro lines that are coming up in the city which are currently under construction.

The contract is still in place but sources explain that the Chinese firm has failed to meet any of the performance indicators. The Chinese firm has sought additional time and BMRCL has decided to wait for some time and initiate suitable action.