ABB, Bhel slug it out over Bidadi project

NEW DELHI, DECEMBER 14: Whenever multinational ABB and public sector Bharat Heavy Electricals Ltd (Bhel) participate in a tender, sparks a...

NEW DELHI, DECEMBER 14: Whenever multinational ABB and public sector Bharat Heavy Electricals Ltd (Bhel) participate in a tender, sparks are bound to fly. While the Talcher tender saw accusations flying thick and fast between the two companies, this time around it is the Rs 800-crore tender for Karnataka Power Company’s Bidadi unit which has caused a flutter. The Industry Minister Manohar Joshi has written to Karnataka Chief Minister S M Krishna to intervene and place the order on Bhel.

Joshi, in his letter dated December 4, has stated that “Bhel is the lowest bidder with an eight per cent margin.” The minister has also said that “KBPCL is considering placing the order on ABB in deviation of the declared evaluation criteria specified in the bid documents.”

The letter also states that KBPCL has “arbitrarily loaded the Bhel’s offer on account of spares,” which has edged Bhel out of the race for the tender.

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In fact, in a desperate bid to save itself from losing the order, Bhel has offered to KBPCL todrop its price by another Rs 15 crore in order to squeeze itself back into the race with ABB.

Adding to the confusion of the moment is the fact that the three-month old managing director of KBPCL resigned earlier this week under circumstances which has given rise to intense speculation.

What is surprising is that a few months ago, when a Janata Dal government under J H Patel was in power in Karnataka, the Congress had alleged that ABB was being favoured by KBPCL while evaluating the tender. Patel, incidentally, was also chairman of KBPCL at the time.

This time around, with a Congress government in power in the state, the tender still seems to be headed ABB’s way without any change in the evaluation process.

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The tender was floated to award the contract for setting up a 200-mw power plant at Bidadi, near Bangalore. Three companies responded to the tender — L&T which quoted Rs 609 crore in its bid, Bhel with a Rs 752-crore bid and ABB with a bid of Rs 845 crore.

L&T’s bid was rejected on the groundsthat the company did not have enough experience with naptha-based power plants. Not only this, it is alleged that ABB was allowed to change its heat rate, a key indicator in the technical specifications for the tender, from its earlier level of 1,805 Kcals/kwh to 1,763 against a figure of 1,718 quoted by L&T and 1,735 by Bhel. It was thus posted ahead of Bhel through “post tender negotiations” was the Congress allegation in June, earlier this year.

Apart from this, KBPCL has declined to give Bhel the deemed export status that is due to a PSU, which would have reduced the bid amount by a further Rs 20 crore apart from the 8 per cent price advantage which is a saving of around Rs 50 crore.

Now with Bhel offering to cut the price by another Rs 15 crore, experts wonder whether this has come a bit late.

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