L&T takes NTPC to HC over rejected bid

In a move that threatens to derail Rs 46,000-crore investm-ent plans of NTPC and Damodar Valley Corporation (DVC), L&T Power has challenged NTPC’s decision to reject its technical bid for the bulk supply of 660-mw supercritical turbines in the Delhi High Court.If L&T manages to block the two PSUs’ equipment buys, it would inevitably result in a huge slippage in the 12th Five Year Plan generation target.

The hearing on L&T’s petition was scheduled for last Wednesday but the judge recused himself from the case. The matter has been posted before another bench, which is scheduled to hear the case on Tuesday.“If the matter (the court case) drags, 12th Plan capacity-addition programme would be affected,” advisor to the power ministry Anil Razdan said.

“We need to place orders for implementation of 25,000-30,000 mw capacity every year. It takes four to five years for projects to reach commissioning stage. Two-three years have already been spent in finalising guidelines for bulk ordering of supercritical equipment. If there is a vacuum in ordering, it would be reflected in commissioning 4-5 years down the line,” Razdan, who is a former power secretary, said.

L&T has just forayed into power equipment manufacturing. The contract is critical for the Rs 43,000-crore company which is keen to establish itself in the Indian power equipment market. When contacted, a senior L&T Power official declined to comment. NTPC will use nine sets of equipment in its own projects while two are meant for DVC. These projects are part of the power ministry’s 12th Plan capacity-addition programme, and crucial to meeting the target of 100,000 mw.

NTPC issued tender for bulk ordering of supercritical power equipment for projects entailing 7,200-mw capacity following the government’s policy to promote development of domestic manufacturing facility and ensure expeditious indigenisation of the new technology.L&T Power was disqualified by NTPC for the supply of both boilers and turbines on the ground that the required technology collaboration agreement with Mitsubishi Industries Ltd was signed by the parent company and not L&T Power.

Only Bhel and L&T Power had submitted bids for supply of boilers. NTPC had to scrap tendering and call fresh bids after L&T Power was knocked out of the race, leaving Bhel as the sole bidder for the project.However, NTPC decided to go ahead with tendering for the supply of turbines as three players — Bharat Forge, JSW and Bhel were still in the race after L&T Power was disqualified.

The government has formulated policy to encourage development of supercritical power equipment in the country. Only those who commit to set up manufacturing facility in India can participate in NTPC’s tendering for the bulk supply of supercritical equipment.

To benefit from the government’s policy, private players like Bharat Forge, JSW Energy, BGR Energy, GB Engineering and Thermax, besides L&T, are setting up manufacturing facility in India in technological collaboration with overseas partners. Bhel is also expanding its manufacturing capacity. Supercritical power equipment are more energy efficient and environment friendly that the sub-critical equipment on which bulk of India’s existing generation capacity addition is based. They are also entitled to carbon credits under the Kyoto protocol.

The government has envisaged phaseout of the sub-critical power equipment over coming years. Under the programme, the government has envisaged half of the capacity addition during the 12th plan based on supercritical equipment and entire capacity in the 13th plan. No new sub-critical plant would be set up post March 2017.Evaluation of financial bids for bulk supply of turbines is currently under way. If the court stays tendering process, award of contract would get delayed. That would in turn delay technology absorption programme.