Maharashtra looks to make Bhel pay for delays in power projects

Maharashtra looks to make Bhel pay for delays in power projects
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First Published: Wed, Aug 15 2007. 01 17 AM IST
Updated: Wed, Aug 15 2007. 01 17 AM IST
State-owned power generating company, Maharashtra Power Generation Co. Ltd (Mahagenco), is threatening to impose a fine on Bharat Heavy Electricals Ltd (Bhel) for the delay in commissioning of the Parli and Paras plants in Maharashtra.
The commissioning of these two plants of 250MW each has been delayed by about nine months.
Mahagenco is in the process of invoking liquidated damages clause against Bhel, a Union government undertaking. Liquidated damages are those claimed in the event of a specified breach of deadline for a project agreed in the contract signed between two parties.
Parli and Paras plants were to start around May and August 2006, respectively. Instead, they went onstream in February and June this year. These two new plants have come up almost after a decade in Maharashtra.
“Delay by a month or two is understandable, but not by 8-10 months, especially when the state is suffering huge power shortage,” says a top Mahagenco official who did not wish to be identified.
Maharashtra saw its shortfall rise to 4,500-5,000MW this year. Once the shortfall even touched 6,700MW during the peak of summer this year.
“We have decided to invoke the liquidated damage clause in the agreement between us and Bhel,” this official said. However, he declined to quantify the “damages”, saying the final details of the claim are yet to be worked out.
“The projects got delayed by nine months. It is an opportunity loss of nine months for the company and the state had to face load-shedding during the summer,” he said.
A Bhel spokesperson, however, refuted these charges, saying, “We were given only 60% of the total project work. We worked on boiler, turbine and generator package. These parts of the projects can be worked on only after the remaining 40% of the civil work is done. This part had to be done by Mahagenco through its various contractors. This was delayed by Mahagenco.”
Besides invoking liquidated damages, Mahagenco has also set up its representative offices in Bhel plants at Tiruchirapalli and Haridwar to ensure that their future orders are met on time. “We have our representatives in these plants to report to us daily about the progress of manufacturing of ourequipment,” said the Mahagenco official.
The power generating company has lined up 2,000MW of additional capacity during Phase I of its expansion projects, which is expected to come up in the next two years. The total cost of the projects expected to come up during Phase 1 is expected to be around Rs9,000 crore. The projects under Phase I include 250MW each capacity addition to the existing Parli and Paras plants; a 1,000MW capacity plant at Bhusawal and a 500MW capacity plant at Khaparkheda. “The cost of equipment to be sourced from Bhel is around Rs5,400,” said the Mahagenco official.
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First Published: Wed, Aug 15 2007. 01 17 AM IST