Govt threatens to blacklist GE; Bhel tie-up may be reviewed

Govt threatens to blacklist GE; Bhel tie-up may be reviewed
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First Published: Tue, Mar 11 2008. 12 04 AM IST
Updated: Tue, Mar 11 2008. 12 04 AM IST
Ratcheting up the pitch of its spat with General Electric Co. (GE) over allegedly defective turbines supplied by the US firm to the Dabhol power project, the government has threatened to ban the company from all future public sector power projects and review its alliance with the state-owned equipment maker Bharat Heavy Electricals Ltd (Bhel).
The government’s claim is that the nine FA-class turbines supplied by GE to the Dabhol power project in Maharashtra are defective and result in frequent breakdowns.
“We have informed the company (GE) that we have no confidence in their machines. It is now for them to restore the confidence in us, failing which we will ask Bhel to review its partnership with GE on turbines. We may also restrict their participation in the public sector power projects. We have made this clear to GE,” said a government official who did not wish to be identified.
Around 90% of the power generated in India is at public sector power projects.
“We continue to have very constructive dialogues with the principals in Ratnagiri Gas and Power Project Ltd. All parties involved are clearly committed to the revival of the plant and are making progress towards that goal. We are very confident in our F-class technology. GE has shipped more than 1,000 F-technology turbines around the world with more than 23 million hours of operation. GE F-technology provides the highest reliability and availability of any turbines in its class. We look forward to continuing our work with the principals of the Dabhol power plant and seeing a successful conclusion to this project,” said a GE spokesperson.
The project, originally called the Dabhol Power Co. was renamed RGPPL after it was taken over by a combine of public sector banks, the Maharashtra government, GAIL India Ltd, NTPC Ltd and financial institutions. It is divided into three phases, of which the second and third phases, with a capacity of 740MW each, are partially operational. The first phase of the project, with a generation capacity of 670MW, is expected to be operational by April.
The issue of defective turbines was raised at a meeting on 7 March. held between the government agencies and GE executives after repeated failures of the equipment.
The meeting was called by the government after Union power secretary Anil Razdan wrote a letter, on 18 February, to John Rice, vice-chairman of GE and president and CEO of GE Infrastructure, raising concerns about the turbines.
As reported by Mint on 26 February, India’s apex planning body in the power sector, Central Electricity Authority has said that the repeated failures of the GE gas turbines will increase the revival cost of the project, and also delay its commissioning.
Currently, GE has an arrangement with Bhel under which it provides the public sector firm with gas turbines; it has also transferred some technology to Bhel. Bhel pays GE royalty for technology transfer. “We only do kit assembling and testing here for 9FA turbines. The main machines come from GE’s plants overseas. We are waiting for the full report from GE,” said a senior executive of Bhel who did not wish to be identified. He refused to comment on the possibility of the alliance being called off.
On 6 April, Mint reported that the second unit of the project was facing problems after the blade of a turbine supplied by GE broke at its root and also damaged thecompressor.
“The government has every right to cry foul. The turbines were not tested at the time of installation as the project itself never got commissioned. It is only now, at the time of revival, that the real problems are surfacing. This is a serious issue and will affect GE’s future plans in the country,” said a senior Delhi-based power sector analyst who did not wish to be identified.
RGPPL was conceived in the 1990s and originally promoted by Enron. It ran into trouble soon after with the government with which Enron signed the agreement losing in the polls to the state assembly, and the new government questioning the high cost of power the plant would produce.’
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First Published: Tue, Mar 11 2008. 12 04 AM IST
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