NTPC, Bhel to settle Talcher issue

NEW DELHI, SEPT 20: National Thermal Power Corporation NTPC is learnt to have started negotiations with public sector Bhel on the price...

NEW DELHI, SEPT 20: National Thermal Power Corporation NTPC is learnt to have started negotiations with public sector Bhel on the price for the Rs 1,400-crore tender for supply of boilers for NTPC8217;s Talcher expansion project. NTPC, it is reliably learnt, wants Bhel to climb down from its price of Rs 1,381 crore and meet NTPC8217;s demanded price of Rs 1,304 crore at least midway.

If the negotiations on price are settled amicably between the two public sector units, the companies may approach the Calcutta High Court to appeal against the stay on the tender for eight weeks.

NTPC officials are upset that if the tender has to be re-bid, the schedule for the project would go haywire apart from resulting in cost escalations. Already the tender has been re-bid once and another round will not add to NTPC8217;s brand equity in the international market.

The tender, which was first floated in December and then re-tendered in May, had raised a lot of dust early last month when multinational ABB8217;s bid, which was thelowest at Rs 1,304 crore, was rejected on the grounds that the bid had been substantially altered by ABB in the second round. Following the rejection of the ABB bid, Bhel was awarded the Letter of Intent on August 10.

The order was placed on Bhel on the condition that it matched the ABB price of Rs 1,304 crore. Bhel rejected this demand for matching the lower price on the grounds that matching the price of a rejected bid was not mandatory.

Meanwhile, ABB8217;s subsidiary ABL which was supposed to have executed the order for the 2000-mw Talcher plant, went to the Calcutta High Court against the award of the tender to Bhel despite ABB8217;s lowest bid. The court on September 3 stayed the tender till the next hearing scheduled after eight weeks.

The tender for the supply of boilers for NTPC8217;s 2000-mw Talcher expansion project were floated in December last. Three companies had bid at that stage 8211; ABB, Bhel and Foster Wheeler. However, all the three bids were found to be non-compliant and the tender was scrapped.NTPC rebid the tender in May again, where ABB and Bhel were the only two contenders. ABB quoted a price of Rs 1,304 crore and Bhel Rs 1,381 crore.

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However, an opinion sought from the Additional Solicitor General stated that the ABB tender which originally had mentioned an import content of 69 per cent suddenly brought down its import content to just seven per cent, which was a major change in their bid which is why it was rejected.

Observers, however, put it down to pure election strategy for getting the ABB bis cancelled and awarding it to Bhel. The 15,000 workers working in the Trichy unit of Bhel where the order was to be executed, which also happened to be the constituency from which power minister P R Kumaramangalam was fighting elections, could not have been a mere coincidence, observers feel.