Bharat Sanchar Nigam Limited (BSNL) may encash ZTE India?s performance bank guarantees (PBGs) worth Rs 1.59 billion following the latter?s failure to supply GSM network gear to BSNL.
BSNL has sought legal advice to initiate action against ZTE for failing to supply equipment gear to the operator for supporting 4.22 million GSM lines in the eastern and northeastern states of India. The operator is contemplating taking action against ZTE for non-submission of unconditional and unequivocal acceptance to advance purchase order (APO) issued for the east zone. Such an action could lead to BSNL forfeiting the PBGs worth Rs 1.59 billion submitted by ZTE against the earlier BSNL purchase orders for south and north zones.
ZTE?s inability to meet BSNL?s GSM gear requirement in the eastern region has derailed the state-run operator?s near $900 million countrywide 2G expansion plans.
Last year, ZTE had out-bided players like Huawei, Alcatel-Lucent, Nokia Siemens Networks and Ericsson to win BSNL?s contract for supplying 2G gear for 10.15 million GSM lines in the northern and southern states at $58 per line. Since, none of the other vendors could match bid price quoted by ZTE, BSNL asked ZTE to supply additional GSM equipment worth Rs 13 billion for meeting the requirement?s of its expansion plans in the eastern region as well.
However, ZTE failed to comply with BSNL?s eastern zone purchase order requirements by January 31, 2013. ZTE has been given March 5, 2013 as the fresh deadline for accepting the terms and conditions of the eastern zone purchase order, failing which, BSNL is likely to encash its PBGs.
