New Delhi: The Indian government, which has long tried to shield local power equipment makers from Chinese rivals, has asked all Central and state sector power producers to make it mandatory for overseas suppliers to set up manufacturing facilities in the country.
The Central Electricity Authority (CEA), India’s apex power sector planning body, has “advised” the power utilities to incorporate the condition when calling for equipment bids to launch a “supercritical” power programme along the lines of similar efforts in the US, Japan, Germany, South Korea and Russia.
The CEA letter, titled Sourcing of supercritical units from indigenous manufacturers, and addressed to all state and Central thermal power producers, has been put up on CEA’s website. Local power equipment makers have been lobbying the government to limit Chinese participation in the Indian power sector.
Supercritical equipment helps in higher plant efficiencies and economies of scale, and is also environment-friendly. State-owned NTPC Ltd, India’s largest power generation utility, is already working on a tender for the purchase of 11 boilers and 11 turbines of 660MW, each having a total order value of around Rs40,000 crore.
CEA’s intervention will favour state-owned Bharat Heavy Electricals Ltd (Bhel) and Larsen and Toubro Ltd, along with joint ventures between Toshiba Corp. of Japan and JSW Group; Ansaldo Caldaie SpA of Italy and GB Engineering Enterprises Pvt. Ltd; and Alstom SA of France and Bharat Forge Ltd that are looking to start manufacturing power equipment in the country.
It will severely limit the ability of Chinese firms such as Shanghai Electric Group Co. Ltd, Dongfang Electric Corp. and Harbin Power Equipment Co. Ltd to bid for projects in India.
“Incorporating this condition will increase the domestic power generation capacity,” said S. Seshadri, member (thermal), CEA.
CEA’s intervention comes after an empowered group of ministers gave its in-principle approval for indigenous sourcing of equipment for all future power projects of 4,000MW and above, as reported by Mint on 20 January.
While the Chinese firms and the private sector domestic manufacturers could not be immediately contacted, B.P. Rao, chairman and managing director of Bhel, did not respond to phone calls or to a message left on his cellphone.
“This will help the new private sector companies setting up base in India to book huge orders,” said Madanagopal R., an equity research analyst at Mumbai-based Centrum Broking Pvt. Ltd.
India has a power generation capacity of 153,000MW and expects to add an additional 62,000MW by 2012. Orders for a capacity of 42,431.58MW have been placed with Bhel, the country’s largest power equipment maker, which has a current annual capacity of 10,000MW.
CEA had earlier expressed its doubts about the long-term sustainability of Chinese power generation equipment, as reported by Mint on 5 September 2008.
Indian power generation firms have placed orders for equipment to generate 26,000MW with Chinese firms such as Shanghai Electric, Dongfang Electric and Harbin Power, largely because of the inability of local manufacturers to meet the growing demand. Chinese equipment is also relatively inexpensive and readily available.