NTPC looks to Bhel to revive Barh project

NTPC looks to Bhel to revive Barh project

New Delhi: State-run electricity generator NTPC Ltd is looking at Bharat Heavy Electricals Ltd (Bhel) to help it revive the Barh power project in Bihar that has been stalled by a price dispute with Russian equipment supplier Technoprom Exports (TPE).

India’s largest power utility has explored the option of awarding Bhel the contract, pending a decision by the cabinet committee on security (CCS) on a proposal to blacklist TPE and terminate the February 2005 deal for the supply of boilers for the 1,980 MW project.

Power secretary H.S. Brahma told Mint that NTPC would approach Bhel to revive the project once the Indian government takes a decision to cancel the TPE contract. “Bhel is already working on the second stage of the Barh project," Brahma said.

While the contract is worth around Rs2,066 crore, TPE, already under investigation for pay-offs it allegedly made to secure the order, is demanding an additional Rs1,700 crore citing higher steel prices, which NTPC is unwilling to pay. Delays in the Barh project threaten to derail NTPC’s power generation target. The utility, which has the capacity to generate 30,644MW of power, plans to raise it to 50,000MW by 2012.

“Bhel is one alternative. We have to evaluate all options," said a senior NTPC executive, who did not want to be identified. He declined to elaborate because of the sensitive nature of the issue.

Bhel, India’s largest power generation equipment manufacturer, is ready to help NTPC provided the entire contract is awarded to it on a fresh basis.

“We are ready to come to NTPC’s help with some conditions," said a top Bhel executive, who also did not wish to be identified. “They have to remove the piling work and award the project to us as a greenfield facility. Only civil foundation work has been done on the site."

The dispute has become a test of the country’s ability to balance commercial and diplomatic interests. Russia is holding up India’s quest for a stake in the Sakhalin-3 crude oil fields until the dispute over the boiler deal is resolved. Russia’s stand was spelt out by Russian Prime Minister Vladimir Putin during petroleum minister Murli Deora’s visit to Russia in November 2008.

Analysts are sceptical about the project being restarted before a settlement at the political level.

“There is pressure for completing the project by a foreseeable date, hence NTPC is evaluating all options. But till a political settlement happens at the top with the Russians it is going to be very difficult," said Anish De, chief executive at Mercados Asia, an energy consulting firm.

Questions emailed to TPE’s India representative, TPE’s Russia office, the Russian embassy in New Delhi and the Russian trade representative remained unanswered till late Wednesday evening.

Although the Indian government decided to hold off from cancelling the controversial contract ahead of a visit by Prime Minister Manmohan Singh to Russia earlier this month, the power ministry and NTPC are insisting that the contract be revoked.

India doesn’t want to rock ties with Russia. The government had bought time by setting up a panel of power ministry and NTPC officials to examine the proposal by CCS on cancelling the contract, as reported by Mint on 8 December.