Legal tangle hits Ecuador Dhruv deal

HAL moves court after the South American nation terminated chopper pact following four crashes

LOSING ALTITUDE: Ecuador had also complained about lack of spares and maintenance in the past. File photo: K. Bhagya Prakash

In a clear indication of its ambition to emerge as a key player in the global defence market, India began exports of its indigenous Dhruv helicopters in 2009 to Ecuador with much fanfare. Almost seven years later, however, the expectations have been severely belied — Ecuador is planning to sell off three remaining helicopters, after four crashed; the Hindustan Aeronautics Limited (HAL) has now moved a local court.

Ecuador had procured the seven Dhruv Advanced Light Helicopters (ALH) in two batches — five in 2009 and two in 2011 — in a deal worth $ 45.2 million. But following the four crashes, Ecuador unilaterally terminated the contract with HAL in October 2015.

Defence sources told The Hindu on Friday that after the termination, HAL had offered free maintenance beyond the contractual obligations but “they wanted more.” “Considering the unreasonable demands, it was decided to take the matter to court. It is underway in the courts of Ecuador,” a source said.

While this was going on, media reports in Ecuador reported that Defence Minister Ricardo Patiño had announced the decision to sell the remaining three choppers last month. “We will not use them. These helicopters will be put into a sale process,” Mr. Patino had reportedly said and added that these helicopters are “used in many parts of the world and are in demand.”

Of the four helicopters that crashed, two had been attributed to pilot error, one was due to a mechanical failure while the reason for the fourth crash is not clear.

Defence sources said HAL was responsible for the maintenance of the choppers for 24 months after which Ecuadorean personnel, who had been trained by HAL, were expected to take over.

HAL rejects charges

Ecuador had also complained about lack of spares and maintenance and the reasons cited for contract termination were “non-compliance of the seller of some of the obligations contracted by virtue of the present contract” and “value of the fines exceeding the amount of guarantee of faithful compliance of the contract.” HAL officials rejected the charges and said enough spares were supplied and stocked in the country during the contract period.

The Dhruv, indigenously designed and developed by HAL, is powered by a Shakti engine, jointly developed by HAL and Turbomeca of France. Over 200 of these choppers are currently in service in India.