New Delhi: State-run power generation utility NTPC Ltd is set to place orders worth Rs 22,000 crore for supercritical equipment, with the Supreme Court on Thursday ruling that Ansaldo Caldaie Boilers India Pvt. Ltd, a unit of Italian boiler maker Ansaldo Caldaie SpA, had failed to technically qualify for the bidding process.
Legal victory: NTPC’s CMD Arup Roy Choudhury. Photo: Pradeep Gaur/Mint
The bidding process for supercritical boilers was stalled by Ansaldo Caldaie Boilers India’s petition to the Delhi high court in 2011 after it was disqualified by NTPC on technical grounds. The high court had directed NTPC not to open commercial bids until it decided on the matter and finally ruled in Ansaldo’s favour. NTPC then appealed the decision in the Supreme Court.
The apex court said that Ansaldo had submitted its bid under an agreement with the Italian unit of Siemens AG for supplying some parts of the technology in the steam generation process. The court held that this violated the tender rules and thereby disqualified Ansaldo.
“The main issue which arises for consideration in this appeal is whether Ansaldo Caldaie, Italy, can be said to be a qualified steam generator manufacturer within the definition set out in the detailed invitation for bids,” said the judgement authored by justice Altamas Kabir.
“The evaporator being offered by (Ansaldo) was one which had been manufactured not by the qualified steam generator manufacturer, but by a third party, which was not contemplated in the aforesaid condition of the tender documents,” the judgement added.
NTPC will now “invite price bids from Bhel and the joint ventures of BGR Energy Systems Ltd and Hitachi Power Europe GmbH; and Larsen and Toubro Ltd and Mitsubishi Heavy Industries Ltd who had technically qualified for the (boilers) order,” NTPC’s chairman and managing director Arup Roy Choudhury said after the verdict.
NTPC’s tender, part of India’s biggest power generation contract, had invited manufacturers last year to supply a package of 11 supercritical boilers and an equal number of supercritical turbines of 660MW each, to be built locally. Of these, nine units are for NTPC’s own stations and two are for Damodar Valley Corporation.
Supercritical equipment will help NTPC improve plant efficiency and achieve economies of scale. By 2032, about half the country’s generation capacity is expected to be coal-based. To mitigate the shortfall, India is planning to set up a bulk of its capacity on supercritical and advanced ultra-supercritical equipment, which are more efficient.
According to the terms of the tender, the lowest bidder will be awarded the order for five units of boilers. In the event of Bharat Heavy Electricals Ltd (Bhel) not being able to bid the lowest, it will have the option to match the lowest bid and will then be awarded four units. While the joint venture of Bharat Forge Ltd and Alstom SA have already emerged as the successful bidder eligible for the award of five turbine units, state owned Bhel and the JV of Toshiba Corp. and JSW group are to be awarded two units each.
The order, part of India’s plans to encourage local manufacturing, bars Chinese firms as it specifies that the winner would have to set up factories in India. It also guarantees Bhel an order. Bhel has been facing competition from Chinese power generation equipment manufacturers such as Shandong Electric Power Construction Corp., Shanghai Electric Group Co. Ltd, Dongfang Electric Corp and Harbin Power Equipment Co. Ltd, both in the local and overseas markets.
NTPC Ltd has not placed a single order for power generation equipment since 2009 because of this lawsuit, issues relating to land acquisition and coal linkages to fuel its projects.
NTPC has an installed power generation capacity of 36,104MW and projects totalling 14,088MW under construction. Equipment for 16,192MW is still under the tendering process, while it plans to award orders for equipment meant to generate 40,000MW during the 12th Plan period (2012-17) for a value of about Rs 2 trillion. NTPC has 15 coal-based, seven gas-based and six joint venture power stations.
nikhil.k@livemint.com
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