THE government may invite global bids for sourcing equipment for 800 mw super critical power plants instead of engaging Bharat Heavy Electricals (Bhel) on a nomination basis. The move would come as a setback to the power equipment manufacturer, which plans to enter into manufacturing boilers and turbines for the super critical plants.
“The power ministry has endorsed a proposal for inviting international competitive bidding for 800 mw sets required by NTPC rather than offering the first order of 10 units to Bhel on a nomination basis. The matter is being considered by the PMO (Prime Minister’s Office),” an official in the ministry of power said.
Bhel was to enter manufacture of super critical thermal power plants 800 mw sets (boilers and turbines) on the back of NTPC order. It was proposed that Bhel should initially be given projects on a nomination basis so that it develops the requisite technology for 800 mw plants before starting the process of international competitive bidding. This was even supported by National Manufacturing Competitiveness Council (NMCC) in its letter to the PMO.
However, it is learnt that the power ministry has suggested PMO that the most competitive and transparent method of allotting a tender in keeping with Integrated Energy Policy and mega power policy is through international competitive bidding route. The ministry has argued that projects given to Bhel on nomination basis would not enable it to secure tax incentives under government’s mega power policy. This could increase the cost of electricity being generated by the plant.
“The ministry has suggested that international competitive bidding should be invited with a condition of progressive and compulsory indigenisation meaning setting up a manufacturing base. Bhel, any joint venture or any other company, could be eligible to bid,” the official said.
The proposal would also result in another manufacturer of power equipment in the country to meet the capacity addition programme of the 11th Plan. “International competitive bidding should not deter Bhel’s 800 mw project as it would continue to enjoy edge over competition in the bidding process in view of its strength in indigenous manufacturing,” said the official.
It may be noted that Bhel has indicated that it would reach 90% indigenisation only by the time it supplies the 10th unit of 800 mw by the end of 11th Plan. Moreover, the discussion on these super critical units between Central Electricity Authority (CEA), NTPC and Bhel has already taken more than a year without any results. So, it is now favoured that international competitive bidding would be preferable without any clause on technology sourcing to encourage FDI in the sector