The Hindu : Business : Move to allow international bidding for power equipment opposed

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Thursday, Nov 29, 2007
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Move to allow international bidding for power equipment opposed

Special Correspondent

Heavy Industry Ministry turns down Power Ministry proposal

NEW DELHI: Amid doubts over the ability of public sector companies to supply power equipment for the 78,000 MW capacity addition during the XI Plan, the Heavy Industry Ministry has turned down the proposal of the Power Ministry to allow international competitive bidding for procurement of power equipment for the 4,000 MW Ultra Mega Power Projects.

The Heavy Industry Ministry has not given a positive nod to the proposal on the ground that the Power Ministry’s proposal favours foreign suppliers vis-a-vis domestic players.

The Heavy Industry Ministry is of the view that providing further incentives under the new UMPP policy could lead to profit maximisation by captive power plants/merchant power plants, without the price reduction being passed on to the consumer. The Ministry’s claim has also got the backing of the National Manufacturing Competitiveness Council which had pointed out that the present clause of 15 per cent price preference may be retained till various reform measures in the domestic tariff are fully implemented.

‘Serious concern’

The Heavy Industry Ministry has also expressed ‘serious concern’ over the move to extend benefits under the UMPP policy to captive power plants and merchant power plants Responding to the issue of purchase preference policy being sought to be waived, the Department of Heavy Industry pointed out that the power sector had been exempted from it since 2005-06. The exemption is subject to the condition that the Power Ministry will place certain orders upon BHEL on a negotiated basis, price benchmarked through competitively bid projects every year.

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