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Sasan failure threatens to unravel PSU majors’ ties

Sasan failure threatens to unravel PSU majors’ ties
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First Published: Sat, Feb 03 2007. 03 52 AM IST
Updated: Sat, Feb 03 2007. 03 52 AM IST
The alliance between the two leading public sector companies in the power sector is likely to come apart, following their failure to bag the bid for the mega-power project in Sasan, Madhya Pradesh.
National Thermal Power Corporation (NTPC) Ltd, the largest power-generation company in the country, and Bharat Heavy Electricals Ltd (Bhel), the largest power-generation equipment manufacturer, had earlier joined hands to bid for the 4,000 megawatt (MW) project. The companies had forged a tie-up to participate in the round of bidding for the big power projects.
NTPC now plans to partner with overseas power equipment manufacturing companies and has initiated talks with some South Korean and Russian companies.
“We feel let down by Bhel. They quoted Rs5 crore per MW as the engineering, procurement and construction cost for the Sasan project, for which the charges should not have been more than Rs3.6 crore per MW,” an NTPC executive said.
Denying the charges, Bhel executives said, “In all fairness, if NTPC comes out with atender and asks for a quote, we are quite confident of being competitive.”
Tying up with a strategic power-generation equipment manufacturer is critical for keeping generation costs low as these projects are being awarded through competitive bidding. “We are in talks with foreign power-generation equipment manufacturers and are open to participate with them for the upcoming projects,” the NTPC executive added.
The company may even partner with the Chinese players, but it is apprehended that their equipment’s performance may not be up to the mark.
The process of selection of successful developers for two other big power projects, Krishnapatnam (Andhra Pradesh) and Tilaiya (Jharkhand), is expected to be completed by April-end. While Krishnapatnam will be a coastal power project, the Tilaiya project is a coal pithead project.
NTPC had bid for the 4,000MW Sasan project along with Bhel, and lost out to the bid of Lanco Infratech (which had teamed up with Globeleq Singapore Pte Ltd as its lead partner) of Rs1.19 per unit as compared to its own bid of Rs2.12 per unit.
The government plans to set up nine such 4,000MW power projects, each of which will also carry an option to expand capacity if desired. Each of them will require an investment of Rs16,000-20,000 crore. Conceived on a build, own and operate basis, these projects will add 36,000MW to the country’s power capacity.
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First Published: Sat, Feb 03 2007. 03 52 AM IST
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