The Economic Times daily newspaper is available online now.

    Govt keeps close watch on Rs 55,000 cr power sector orders to Chinese companies

    Synopsis

    Most private and various state power companies are in discussions with Chinese companies for the emission control gear. Power utilities of states like Uttar Pradesh, Punjab, Haryana, Tamil Nadu, Karnataka and Maharashtra have sought global bidders for procurement against the Centre’s public procurement norms, sources said.

    Thermal---AgenciesAgencies
    Representative Image
    NEW DELHI: The government is keeping a close watch on the tendering of the Rs 55,000-crore emission control equipment by the thermal power sector that has placed large orders on Chinese companies in the past.

    Most private and various state power companies are in discussions with Chinese companies for the emission control gear. Power utilities of states like Uttar Pradesh, Punjab, Haryana, Tamil Nadu, Karnataka and Maharashtra have sought global bidders for procurement against the Centre’s public procurement norms, sources said.

    Chinese emission control equipment is 20% cheaper than domestic gears.

    Power-Play


    While Gujarat has placed order with a Chinese firm, Haryana recently cancelled its Chinese order. In his meet with various state power ministers on Friday, Union power minister R K Singh is likely to ask states to comply with the Central public procurement norms in placing orders, the sources said.

    ET had on June 23 reported that the Union power ministry is likely to mandate higher local content in government procurement tenders or those backed by Power Finance Corp and REC. The ministry is compiling a list of equipment with adequate manufacturing and enough competition in India. The proposal comes in the backdrop of border tensions between India and China in Ladakh as well as disruption in global supply chains due to Covid-19.

    Total emission control equipment requirement as per an environment ministry order is pegged at about Rs 80,000 crore.

    Of this Central government utilities in India, including NTPC, have almost completed ordering its emission control equipment of about 50GW or Rs 25,000 crore, mostly through domestic competitive bidding in line with public procurement norms.

    NTPC has placed about 40% of its orders on BHEL, 20% each on L&T and GE. Thermax India, BGR Energy and Shapoorji Pallonji are the other players in India.

    However, the Centre is in double whammy amid the China-ban drive as local manufacturers may not be able to deliver the projects in short timeline stipulated by the Supreme Court. The court last week declined to give a blanket extension to power plants to install the flue gas desulphurisation (FGD) units that cut emissions of sulphur dioxide. The power plants have agreed to phased plan for installing emission control equipment by next year, failing which they face closure.

    While local players like BHEL can supply the equipment, installation of emission control gears involves lot of civil work and would require a large EPC contractor base, the sources said. Chinese companies being first movers have price and technology advantages and large base of vendors.

    The Department for Promotion of Industry and Internal Trade (DPIIT) under the Ministry of Commerce and Industry on June 4 modified public procurement norms to give preference to companies whose goods and services have more than 50% local content. The revised order on public procurement classifies suppliers into class-I, II and non-local suppliers, based on which they will get preference in government purchases of goods and services.

    A senior government official said the power ministry is likely to revise its January 2019 orders, which contained an exhaustive list of equipment along with the local content requirements to be met by power companies, to promote make in India.


    (You can now subscribe to our Economic Times WhatsApp channel)
    (Catch all the Business News, Breaking News Budget 2024 News, Budget 2024 Live Coverage, Events and Latest News Updates on The Economic Times.)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    ...more
    The Economic Times

    Stories you might be interested in