Bhel set to miss target

Bharat Heavy Electricals Ltd (Bhel), the country’s largest power equipment manufacturer, is set to miss its capacity addition target, which may delay power projects of companies such as NTPC and other state-run utilities by at least three months, according to sources.

Bhel had set a goal of increasing its manufacturing capacity to 15,000 mw by December 2009 from the existing 10,000 mw.

Over 90% of the thermal plant orders from government owned power companies such as NTPC are placed with Bhel.

“The management of the company has told us that they are facing some financial problem due to which delivery of some critical machinery has not been made by the foreign firms. They would need another 100 days to get their increased capacity to be in place,” said a source in the power ministry.

Recently, DNA had reported that the Planning Commission was unhappy with Bhel’s performance as many Indian power utilities had complained of delayed delivery of power equipment.

The Planning Commission had said in a letter that “Bhel’s project management skills are poor. It must commission all power plants as committed for completion in the XIth Plan.”
“Most of our capacity is in place, barring few equipment. By March 2010, we will get delivery of that equipment as well,” said a Bhel official.

Most of the private power firms such as Reliance Power, Lanco Infratech and Adani Power place a large quantity of their orders with Chinese firms because of their ability to deliver orders in a shorter duration as compared with Bhel.

Bhel has been trying to get orders from private players by promising them an improved delivery period.

Nearly 70% of the power equipment required for meeting the 11th Plan capacity addition target of 78,700 mw is placed with Bhel.

“The delay in capacity addition by Bhel will have a negative impact on its orders from private players in the short to medium term. Private players are trying to complete their projects before March 2011 to benefit from the Central Electricity Regulatory Authority notification that allows additional 0.5% of rate of return for the power plants that are commissioned before March 2011,” Rupesh Sankhe, analyst with Angel Broking, said.
The existing regulated rate of return for power projects is 15.5%.