Unable to find a partner to make a joint bid for the 4,000MW ultra mega power project (UMPP) at Krishnapattnam in Andhra Pradesh, NTPC Ltd, India’s largest power generation company, has decided to go it alone.
The decision was confirmed by NTPC chairman and managing director T. Sankaralingam.
Collaboration with a strategic power-generation equipment manufacturer is critical for keeping generation costs low as these projects are being awarded through competitive bidding.
NTPC had refused to partner with Bharat Heavy Electricals Ltd (Bhel) after it lost out to Lanco in the bid for the Sasan project in Madhya Pradesh. NTPC blamed it on the higher engineering, procurement and construction costs quoted by Bhel.
The NTPC-Bhel bid was for Rs2.12 per unit of power generated, compared with Lanco-Globeleq Singapore’s Rs1.19.
“We feel let down by Bhel. They had quoted Rs5 crore per MW as engineering, procurement and construction cost for the Sasan project; it shouldn’t have been more than Rs3.6 crore,” an NTPC executive had told Mint earlier, on condition of anonymity.
NTPC had entered into talks with power-equipment makers from Russia and South Korea to quote lower prices for the Krishnapattnam project as reported by Mint on 3 February. But neither of those deals materialized.
Meanwhile, Bhel is still hopeful that NTPC would revive the partnership. A senior Bhel executive, who did not wish to be identified, said: “They (NTPC) may later come to us for the equipment once they win the project.”
Industry analysts believe that eventually NTPC may have to reconsider its decision. A power sector analyst who did not wish to be identified said, “Both NTPC and Bhel will have to reach a middle ground. NTPC will have to tie up with an engineering, procurement and construction (EPC) company which will require sizeable negotiations.”
Along with the other UMPPs, the Krisnhapattnam project too has met with its own set of problems. The Andhra Pradesh government wants to build another 4,000MW UMPP at the same location.
Both plants are to use imported coal as feedstock. This has raised fears as imported coal has high sulphur content, and will mean the installation of equipment to reduce sulphur emissions. But installing such equipment would increase the cost of the project, estimated at Rs16,000 crore, by another 15-20% and a corresponding increase in the cost of the power produced.
A senior central electricity authority executive responsible for the site selection when contacted said that efforts were under way to address the issue.