PowerGrid to curb equipment imports

Taking a cue from the government’s policy on supercritical power generation technology, state-owned transmission utility PowerGrid plans to curb supply of imported transmission equipment like 765 kv transformers and reactors for its projects. Currently, India meets the bulk of its requirement on this front through imports.

PowerGrid has made a key change in its procurement policy that mandates manufacturing facility in India as an eligibility condition to supply equipment for the company’s projects. The company’s earlier procurement policy required only repair facility in India. “Earlier, anybody could bid for PowerGrid projects provided they had R&M facility in India. But the new policy lays down that an overseas supplier must have a company here,” a PowerGrid source told FE. The move will shut out suppliers like Hyundai Heavy Industries of South Korea and TBEA of China from the Indian market—companies giving tough competition to suppliers from western Europe like ABB, Siemens and Areva T&D with lower prices.

The company maintains that the move is meant to ensure availability of timely after-sales service. However, industry experts apprehend that it could end up restricting competition in the domestic transmission equipment market. As a central transmission utility (CTU), PowerGrid is solely responsible for laying and operating the country’s national and inter-regional transmission network. With the country envisaging huge capacity addition in the coming years, PowerGrid has lined up an investment plan of over Rs 1 lakh crore to augment the capacity of its transmission network commensurately. These high-tech equipment normally account for about 10% of the total project cost. While manufacturing facilities for high-tech power supply equipment are being set up in India by domestic vendor Bhel as well as European suppliers like ABB, Siemens and Areva T&D, production is yet to begin. Pending that, requirements for these equipment are being met through imports.“These equipment are meant to be in service for 25-30 years. The earlier condition of indigenous R&M facility was not enough,” the source said.

“Three-four overseas suppliers are already setting up manufacturing facilities here. Others are also agreeable to the idea because demand is here. Sourcing equipment indigenously will help us ensure timely replacement of equipment in case of fault or damage,” the source added. As per the company’s revised procurement guidelines, potential bidders must have a manufacturing facility in India. Those who do not have manufacturing facility in India can still qualify provided they give an undertaking to set up the facility within three years. They will be required to furnish a bank guarantee to ensure that they comply with their undertaking....