New Delhi: In an attempt to revive its 1,980MW Sipat project in Chhattisgarh by resolving a contractual dispute with Russia’s Power Machines, state-run utility NTPC Ltd plans to approach the Central Vigilance Commission, or CVC, seeking approval for making additional payments as demanded by the Russian firm.

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Interestingly, NTPC’s move comes even as it has upped the ante in a similar contractual dispute with another Russian firm Technoprom Exports (TPE), over the supply of a boiler for its 1,980MW Barh project in Bihar. An NTPC executive, who did not want to be identified, said this was because the Sipat project was 90% complete and the utility had already invested substantially in it. The Barh project is being investigated by the Central Bureau of Investigation, which says bribes were paid by the Russian company and its agents to secure the contract.

Power Machines got the contract for supplying the turbines for both projects.

In the case of the Sipat project, NTPC is willing to pay the additional amount being demanded by Power Machines, said a senior government official who asked not to be identified, citing the sensitive nature of the issue. Power Machines is seeking more time to deliver the equipment and an upward revision in price to the tune of around Rs1,100 crore, citing rising input costs. However, NTPC is expected to make an additional payment of only around Rs400 crore. The original order, for Rs1,150 crore, was placed with a consortium headed by Power Machines on 6 February, 2004.

The same NTPC executive added: “To make any additional payment, we require a CVC clearance. We have taken the issue to our board," this person added. CVC oversees the financial functioning of India’s state-owned firms.

Current affairs: NTPC’s Sipat project. The power utility is involved in a similar dispute with Technoprom at the Barh plant, but is willing to settle in Sipat’s case because 90% of the project has been completed.

Mint had reported on 16 December that the delay in the Sipat project was on account of Power Machines not releasing payments on time to its sub-vendors. Power Machines is also seeking to renegotiate the terms of its contract with NTPC for the Barh project.

Questions emailed to Power Machines on 27 September remained unanswered.

“The contracts for Barh and Sipat are different. We are trying to resolve the dispute otherwise the entire plant will become junk. While the boiler is ready, the turbine is 90% complete. Even 90% of the money has been invested. What is the choice we have?" asked the first NTPC executive.

NTPC is India’s largest power generation firm with a capacity of 30,644MW. The delay in the Sipat project could affect its plans to raise its generating capacity to 50,000MW by 2012.

“Unless CERC (Central Electricity Regulatory Commission, India’s apex electricity regulator) objects to the cost escalation resulting in an increase in tariffs from the project, I do not see a problem for NTPC. In fact, this is a positive development for the utility," said Madanagopal R., an equity research analyst at Mumbai-based Centrum Broking Pvt. Ltd.