General Electric in legal tussle with Numaligarh

Vol 4, PW 11 (05 Jul 00) Midstream & Downstream

Promoters of a 3m tonnes a year (t/y) refinery at Numaligarh in Assam are threatening legal action against an Italian-based subsidiary of General Electric Power Systems.

This report learns the dispute centres on some (allegedly) defective "bubble caps" for the refinery's hydrocracker unit supplied by Florence-based GE Nuovo Pignone. It is understood the caps were imported through the offices of an Indian company based in Gujarat.

Nuovo Pignone is a leading global manufacturer of compressors, gas and steam turbines, pumps and other equipment for the oil, gas, and power generation industries. In a letter dated 3rd June a senior official from Numaligarh Refinery wrote to Nuovo Pignone threatening legal action and damages (believed to be Rs40cr or $9.2m) unless the caps were replaced.

In May he wrote two milder letters to the company to replace the caps. Numaligarh began commercial production on April 9th this year, in a high-profile ceremony attended by dignitaries from the Indian oil ministry.

Difficulties began soon after. "Production had to be stopped because of problems with all three reactors," an official tells Petrowatch "We found fifty percent of the reactor caps were badly damaged." The official said the refinery has lost Rs100cr ($23m) in lost production.

Numaligarh Refinery has set up a five-man committee to deal with the issue. From New York, Ken Darling, a spokesman for GE Nuovo Pignone, told Petrowatch: "Our policy is not to comment on any situation when legal action is pending." General Electric acquired Nuovo Pignone in 1994.

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