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GE blames Punj Lloyd for Dabhol issues

GE blames Punj Lloyd for Dabhol issues
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First Published: Mon, Jul 28 2008. 07 02 AM IST
Updated: Mon, Jul 28 2008. 05 17 PM IST
New Delhi: General Electric Co., the US conglomerate that has been criticized by the Indian government over the frequent breakdown of turbines that it had supplied to Ratnagiri Gas and Power Pvt. Ltd, is pointing the finger at engineering and construction firm Punj Lloyd Ltd for “poor preservation” of the equipment, resulting in repeated failures.
This finding is part of an investigation by GE Energy, a unit of General Electric, conducted following the government’s claim that four of the six “9 FA-class” turbines supplied by GE to the Maharashtra power project were defective.
The government had also raised questions about the shortfall in power generation from these turbines.
A senior government official, who didn’t want to be named, said: “They (GE) are blaming that the poor preservation of the turbines by Punj Lloyd has been the main reason behind these repeated failures.”
“GE is of the view that if some machinery is kept idle for a long period of time, there are bound to be some problems,” said another government official associated with the investigation who also didn’t wish to be identified.
Meanwhile, a GE spokesperson said in an email response: “GE has no comment as the root cause analysis results are proprietary information for GE and RGPPL (Ratnagiri Gas).”
The “care and preservation” contract involved protection of the equipment and maintenance of the associated infrastructure, including back-up power services.
Vimal K. Kaushik, managing director, Punj Lloyd, refuted GE’s charges.
“We have all the certificates and papers to prove that we have properly preserved and maintained the project,” he said. “At the time of handing over the project around two years back, all inspections were carried out and we have got everything in writing. The machine failures have got nothing to do with us.”
The project, previously called the Dabhol Power Co., was conceived in the 1990s and was originally promoted by Enron Corp.
Punj Lloyd got the “care and preservation” contract in May 2002 from financial institutions led by IDBI, after the project was taken back from Enron.
It was renamed RGPPL when it was taken over by a combine of IDBI-led public sector banks such as the State Bank of India, ICICI Bank Ltd and Canara Bank, the Maharashtra government (Maharashtra State Electricity Board), GAIL (India) Ltd and NTPC Ltd in mid-2005.
R.K. Goel, chairman, RGPPL, and director, finance, GAIL India, would only say via a text message: “It is too early to comment anything.”
The project is divided into three phases, of which the second and third phases, with a capacity of 740MW each, are partially operational. The first phase, with a generation capacity of 670MW, is yet to be operational.
The Central Electricity Authority, India’s apex planning body in the power sector, had said repeated failures of the GE gas turbines will increase the revival cost of the project, besides delaying its commissioning.
Besides the loss of power generation capability, government officials argue that repeated failures entail substantial repair cost. Excluding the cost of spares, this has been estimated at Rs77 crore.
The project cost was originally estimated at Rs10,038 crore, which was revised to Rs11,998 crore. The latest revisions peg the project cost at Rs12,182 crore.
The government had threatened to ban GE from all future public sector power projects and review its alliance with state-owned equipment maker Bharat Heavy Electricals Ltd as reported by Mint on 11 March.
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First Published: Mon, Jul 28 2008. 07 02 AM IST