The offer was seen as a last-ditch attempt by the Germans to wrest the project from the Italian conglomerate, Snamprogetti, which had already been shortlisted to bag the lucrative contract. The reduced offer would have bested Snamprogetti's leveraged bid by over Rs 240 crore.

The Uhde offer was contained in a letter sent to the Union minister for chemicals and fertilisers, SS Barnala, only two days before the board of directors was to meet in Muscat. The letter, written by two directors of the German company, said: "In the light of changed global competitive environment, we are willing to reduce our bid price by a minimum of 2.5 per cent".

A week prior to the time that the letter was sent,executives of Uhde personally offered, at a meeting with Barnala in Delhi, to reduce their bid by as much as 10 per cent. This works out to a reduction of Rs 320 crore.

The German offer to reduce its bid was rejected on the ground that it came much after the completion of the entire selection process. Since Snamprogetti has already been selected for the contract, Uhde's offer could not be considered. To open the bidding process again would apparently be a violation of international tender norms.

Sources said that Barnala refused to intervene in the issue, fearing that his involvement would add another twist to what had already become an increasingly controversial selection process for vendors. A calling-attention motion on the issue is pending in the Parliament and the minister did not want to complicate matters by issuing any instructions to his representatives on the board of the Indo-Oman company. Over a dozen members of Parliament have written to the minister seeking a re-evaluation of the vendorselection process for the project.

But the bureaucracy in the fertiliser ministry seems to be split over the latest offer by the Germans. Some executives from the public sector fertiliser companies represented before the minister that the cost of the Oman project has been highly inflated. While the turnkey segment is worth Rs 3,200 crore, the cost of the entire project comes to over Rs 4,000 crore.

In comparision, even after taking into account extra taxes and duties levied in India, a similar project would not cost more than Rs 3,000 crore. Examples were furnished to Barnala of the expansions being undertaken by Iffco, Kribhco and RCF at considerably lower prices than that quoted for the Indo-Oman project. The 10 per cent reduction now offered by Uhde has been bandied as an example of how the project cost has been padded up.

Unfortunately for Uhde, the Omanese government - which owns 50 per cent of the equity of the joint venture - is apparently at odds with the German company. Even if the Indian sideis willing to allow a re-evaluation, the Omanese government has made it abundantly clear that it is not in favour of reopening the bids.

The relationship between the Omanese and the Germans soured sometime during the selection process, when the two companies were hectically lobbying with the political brass in the Sultanate.