Only local equipment for state power cos

The Central Electicity Authority (CEA) has made it compulsory for winning bidders to order equipment such as boilers and turbine-generators for supercritical power plants from indigenous manufacturers.

The regulator has done so by asking state and central utilities to incorporate an “indigenous manufacturing clause” for all equipment bids, effectively shutting out Chinese equipment manufacturers, whose products are 10% to 15% cheaper than those of Bhel.

Apart from Bhel, India-based joint ventures such as those between Larsen & Toubro and Mistubishi Heavy Industries; JSW Group and Toshiba Corp; GB Engineering and Ansaldo Caldaie of Italy; and, Bharat Forge and Alstom are expected to benefit.

Kuljit Singh, partner-infrastructure practice, Ernst & Young, said this is the second logical step for the CEA to ensure a good orderbook for companies that have decided to set up their base in India.

“The move will encourage more players to set up facilities in India as that is the only way to enter the large Indian market now,” Singh said.

On their part, Chinese companies have won orders from the private sector mostly, barring some state and central utility projects in Haryana and West Bengal.

Currently 38 supercritical power plants are under construction and some of them are scheduled to be commissioned in the Eleventh Plan (fiscal 2008-12).

“Creating requisite indigenous manufacturing capacity is vital for such a large induction of supercritical power units with a view to ensure lifetime support for services and spares, specific problem-solving and customidation for trouble-free operation of these units in Indian conditions,” CEA said on its website.

The move comes two weeks after an empowered group of ministers barred import of supercritical power plants for future ultra mega power plants (UMPP).

To meet demand, Bhel is expected to be ready with a manufacturing capacity of 15,000 mw by this March, compared with 10,000 mw that it currently has. Bhel is late in capacity addition, however: it was supposed to ramp up its capacity by March 2009.