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Contract disputes delay NTPC’s Barh project

Contract disputes delay NTPC’s Barh project
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First Published: Thu, May 01 2008. 11 33 PM IST

Losing out: NTPC’s Singrauli plant. With a capacity of 29,144MW, the company is India’s largest power generator. The delay in the Barh project will affect its plans to raise its capacity to 50,000MW b
Losing out: NTPC’s Singrauli plant. With a capacity of 29,144MW, the company is India’s largest power generator. The delay in the Barh project will affect its plans to raise its capacity to 50,000MW b
Updated: Thu, May 01 2008. 11 33 PM IST
Work on NTPC Ltd’s Rs8,700 crore Barh power project in Bihar, already behind schedule for two years, has virtually come to a standstill following contractual disputes between the state-owned power producer and two Russian suppliers of key equipment.
Losing out: NTPC’s Singrauli plant. With a capacity of 29,144MW, the company is India’s largest power generator. The delay in the Barh project will affect its plans to raise its capacity to 50,000MW by 2012.
Technoprom Exports and Power Machines, the two Russian companies, are demanding more money for the equipment, citing higher steel prices. Technoprom was to supply boilers to the project, while turbines and generators were from Power Machines.
This is the same project on which C.P. Jain, who was the chairman and managing director of NTPC when the contract was awarded, is facing a Central Bureau of Investigation (CBI) inquiry.
“The project has been controversial from the start when CBI had raided the home of C.P. Jain over the issue of alleged pay-offs made by Technoprom,” said a senior power ministry official, who did not wish to be identified.
“Though there were contractual disputes even earlier, the Russian companies want a price escalation in the contract on account of an increase in steel prices. We are in talks with the Russian companies to revive the project,” he added.
NTPC is India’s largest power generation company with a capacity of 29,144MW. The delay in the project will affect its plans to raise the total capacity to 50,000MW by 2012.
Technoprom and Power Machines didn’t immediately respond to emailed questions.
The 1,980MW project requires 40,000 tonnes of construction material of which only 30%, or 12,000 tonnes, has been sourced. The project’s foundation stone was laid by former prime minister Atal Bihari Vajpayee in 1999.
“There have been inordinate delays in the supply of equipment from Technoprom Exports and Power Machines for units I, II and III,” an NTPC executive, who did not wish to be identified, said.
“NTPC’s projects are getting chronically delayed. It is also true that the price of steel and raw materials has indeed hardened, which is linked to the timely delivery of equipment. Russian companies work on a government-to-government intervention, which unfortunately is not the case with NTPC which is a commercial entity,” said Anish De, chief executive at Mercados Asia, an energy consulting firm.
Barh is among the six units that have been identified for cement manufacturing using fly ash in association with private firms. Fly ash is generated when coal is used as fuel.
In order to tide over problems such as this, NTPC has partnered with public sector Bharat Heavy Electricals Ltd (Bhel) to form a joint venture, NTPC-Bhel Power Projects Pvt. Ltd, to manufacture turbines and generators, and carry out contracts for engineering procurement and construction.
This is not the first NTPC project that is being delayed.
Lack of adequate road and rail links in Bihar have delayed its plans to expand generation capacity by 1,000MW at its Kahalgaon project, as reported by Mint on 4 January.
The expansion plan also got stuck due to the workers’ union agitation, after which the the Union power ministry had brokered a settlement on the issue with the Centre of Indian Trade Unions.
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First Published: Thu, May 01 2008. 11 33 PM IST