Home | News    Tuesday 17 July 2007

Sudan delays payments of pipeline instalments to India - report

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July 16, 2007 (NEW DELHI) — India’s relations with Sudan appear to have got into a knot over a petroproducts pipeline in that country built by OVL, the overseas investment arm of ONGC, The Times of India reported yesterday.

According to the Indian newspaper Sudan is delaying payment of three installments towards the cost of the pipeline. It further expressed doubt of the payment of the next installment, that will become due on June 30, or paying interest for delayed payments.

OVL completed the 741-km pipeline connecting Khartoum refinery to Port au Sudan in August 2005, two months ahead of schedule, at an investment of $194 million. This included a $15 million component for financing of pumping stations etc. As per agreement with OVL, Sudan’s ministry of energy and mining was to pay back investment in 18 half-yearly equated instalments of $14,134,790 each.

The contract also lists as the first option the provision of ONGC Videsh recovering the instalments by taking crude oil instead of cash. As per this clause, Sudan was to offer the oil three months before an instalment became due to allow ONGC Videsh to tie up shipping and supply or trading arrangements.

Oil ministry documents show Sudan has not kept its word and has not allowed OVL to exercise the option of taking payments. Of the three instalments paid so far, the first was delayed by two months, second by one month and the third by over four months. OVL is yet to hear on the next installment and interest claim due to delayed payment of earlier installments besides three claims made for additional work done as per Sudan government’s demands.

After a series of meetings between ONGC executives, officials from Sudan’s ministry of mining and energy, representatives of SPPC — the Sudan government-run company that executed the project and operates pipeline — promised in March that they will send within 10 days to government a proposal for settling OVL’s claims of $47 million.

Nothing, however, moved and OVL took up the matter with top officials of Sudan’s ministry of energy and mining in May and June, only to be greeted with silence from the other end.

(The Times of India)

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