Tatas threaten to scrap Vista electric launch

Tatas threaten to scrap Vista electric launch

"The company is furious after being told by officials from (Secretary of State for Business, Innovation and Skills) Lord Peter Mandelson's business department that it needed more time to find out if the venture will be considered for the loan -- taking the total wait to six months," it said.

In April, Tata Motors registered its expression of interest to apply for the 10 million pounds loan to help launch the Vista electric vehicle, which was unveiled at the Geneva Motors Show this year, and build an assembly line for it in the UK.

But last Tuesday, the company was told that it will take another eight weeks for the business department to decide whether it had met the necessary criteria and can be considered for the loan, according to a report in The Observer.

The report said executives of Tata Motors will meet Ian Lucas MP, who oversees the 2.3-billion pounds car assistance package, and deliver a petition signed by senior managers from Tata Motors' R&D centre, TMETC, based at Warwick University, which helped design the car.

No money has been released by the government from its 2.3 billion pounds package, which it unveiled in January. The package is made up of loan guarantees and loans for car makers wanting to invest in fuel efficient technologies, the report said.

Nissan was granted 400 million Euros loan by the European Investment Bank in April and the government is understood to be close to agreeing to underwrite it.

Tata Motors' Norwegian subsidiary, Miljo, has already been awarded a 6-million pounds loan and a 1-million pounds grant from the Norwegian government for electric cars.

Tata Motors remain in deadlock in talks with the department over securing support for luxury cars Jaguar Land Rover.

The firm secured a 340 million Euros (292 m pounds) loan from the European Investment Bank in April but this needs to be guaranteed by the government and the two sides still cannot reach agreement on the conditions.

Paul Everitt, chief executive of trade body SMMT, said: "Ministers... want to make sure the public purse is protected.? But when you're talking about a company the size of Tata, it shouldn't be a concern ? Officials are spending an awful lot of time creating conditions and scenarios which will not come to pass."

He said ministers were being over-cautious because they wanted to avoid a repeat of the MG Rover fiasco, when the government granted a 6m pounds loan to the carmaker months before it collapsed.

A Department for Business Innovation and Skills spokesman said: "It is important to understand that this scheme is about long-term investment projects, rather than short-term rescue? We have to work at the pace demanded by the companies and also have to consider the best interests of the taxpayer."

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