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Alstom-Bharat Forge edge out Bhel

Alstom-Bharat Forge edge out Bhel
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First Published: Sat, Oct 09 2010. 01 24 PM IST
Updated: Sat, Oct 09 2010. 01 24 PM IST
New Delhi: A joint venture (JV) between Paris-based Alstom SA and Bharat Forge Ltd edged out state-run Bharat Heavy Electricals Ltd (Bhel) to emerge as the lowest bidder, entitling it to the majority share of a Rs 9,200 crore tender, part of the single largest order ever for supply of power generation equipment.
Power sector analysts termed it a “game changer” for the Indian power equipment manufacturing sector, as the winning bid is as competitive as the prices offered by Chinese suppliers such as Shanghai Electric Group Co. Ltd, Dongfang Electric Corp. and Harbin Power Equipment Co. Ltd.
The order was floated by state-run power utility NTPC Ltd for the supply of 11 supercritical turbine generator (TG) sets of 660MW each. Supercritical equipment improves the efficiency of power plants in terms of better fuel utilization and lower emissions.
“The Bharat Forge JV was the L1 bidder, followed by Bharat Heavy Electricals Ltd, which was L2 and the joint venture of Toshiba Corp. and JSW Group, which was the L3 bidder,” said a person familiar with the development who did not want to be identified. The price bids were open on Friday.
The bids will be evaluated by a committee and the report will be submitted to NTPC’s board for approval.
According to the tender conditions, while the Alstom- Bharat Forge JV will get up to five units, Bhel will get four, with the remaining two going to the Toshiba-JSW JV, provided they match the quote of Alstom-Bharat Forge JV.
With the turbine generator accounting for around 40% of the equipment cost, the balance comprises the cost of boilers. “We had quoted very aggressive prices,” said a senior executive at the Alstom SA-Bharat Forge JV who did not want to be identified.
The tender has run into controversy after NTPC disqualified bids by a venture of Larsen and Toubro Power Ltd, a unit of Larsen and Toubro Ltd (L&T), and Japan’s Mitsubishi Heavy Industries Ltd (MHI). L&T approached the Supreme Court on 6 October after the Delhi high court refused its plea to stay the bid process. The case is now scheduled for hearing on 25 October.
While an L&T spokesperson declined to comment since the matter was sub judice, a top NTPC executive who did not want to be identified said: “We will award the TG package this month. The boiler package for which a fresh tender was floated will be awarded by January next year.”
NTPC’s record tender had invited manufacturers to supply 11 supercritical boilers and an equal number of supercritical turbines of 660MW each, to be built locally. Of these, nine units are for NTPC’s own stations and two for Damodar Valley Corp.
While B.P. Rao, chairman and managing director, Bhel, declined to comment, questions emailed to the JSW spokesperson remained unanswered at press time.
The initial bidders for the supply of TG sets included Bhel, Russia’s Power Machines, and the Toshiba-JSW, L&T-Mitsubishi and Alstom-Bharat Forge JVs. The tenders of the L&T-Mitsubishi JV and Power Machines were later rejected.
“This will provide a strong start to the Alstom SA-Bharat Forge JV’s domestic operations. It was only expected that the bids would be competitive,” said Anish De, chief executive at Mercados Asia, an energy consulting firm.
The winner will have to set up factories in India to develop the local power generation equipment manufacturing industry. Such projects tend to be capital-intensive, with investment running into several thousand crores of rupees.
utpal.b@livemint.com
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First Published: Sat, Oct 09 2010. 01 24 PM IST