PM’s decision awaited before order is placed for power equipment

PM’s decision awaited before order is placed for power equipment
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First Published: Thu, Feb 12 2009. 12 40 AM IST
Updated: Thu, Feb 12 2009. 12 40 AM IST
New Delhi: Prime Minister Manmohan Singh will take a final decision on qualification criteria before India places its largest order of power generation equipment that uses supercritical technology, according to a government official.
“The total order will be for 11 units as against nine units earlier. Member power has recommended the orders to be split for turbines and boilers and has approved the recommendations of the CEA (Central Electricity Authority),” the official said on condition of anonymity.
Planning Commission member, power, B.K. Chaturvedi has suggested splitting the orders between state-owned equipment maker Bharat Heavy Electricals Ltd, or Bhel, and the lowest bidder.
He was asked to look into the issue by a group of ministers led by home minister P. Chidambaram that has power minister Sushil Kumar Shinde and heavy industries and public enterprises minister Sontosh Mohan Deb as members.
Singh is convalescing after a heart bypass surgery on 24 January and is expected to be resting for at least another three weeks. Boilers and turbines using supercritical technology achieve high power plant efficiencies and economies of scale. The government plans to order for 11 such units of 660MW each that would together cost around Rs18,150 crore for state-owned electricity generator NTPC Ltd and Damodar Valley Corp.
The issue of qualification criteria gathered steam after engineering company Larsen and Toubro Ltd lobbied the government to make it mandatory for bidders to be incorporated in India, with at least 51% equity held by a domestic firm, as reported by Mint on 5 September. CEA, India’s apex power sector planning body, was opposed to the equity clause because it would limit competition.
“This issue does not arise as the participation will have to be broad-based. The final qualification requirement will be set up by NTPC,” the official quoted earlier clarified.
The latest formula is likely to work like this: The lowest bidder for boilers will be given an order for six units. If Bhel is the lowest bidder, it gets the order for six units. If it is not, the government will still award it the order for the remaining five units (of the 11), provided it agrees to match the lowest bid. If Bhel does not match the bid, an option will be given to others in the order of bid ranking. A similar system will be followed while ordering for the turbines.
The orders—expected to be placed by the end of this fiscal year that ends on 31 March—will be placed through international bidding, with a condition that the winner set up manufacturing facilities in India. “We are ready with the certifications. As soon as we get a go ahead, the notice inviting tenders can be issued,” the official said.
Amol Kotwal, deputy director, energy and power systems practice at consultancy Frost and Sullivan, said: “This is a significant order, given the fact that India has launched super-critical power programme on the lines of the US, Japan, Germany, Korea and Russia, (and) given the fact that supercritical technology will result in saving of about 4% of fuel and correspondingly less emission.”
utpal.b@livemint.com
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First Published: Thu, Feb 12 2009. 12 40 AM IST