Fuel,funding issues for new projs may hurt power equip orders

“There has been a visible slowdown in power sector orders over the last six months,led by uncertainties on availability and pricing of fuel,delays in regulatory clearances as well as difficulty in raising equity funding for new projects,” IDFC said in a report.

IDFC is a leading player in the infrastructure financing sector.

With no immediate resolution in sight,IDFC said it believed there was a risk of a sharp slowdown in order flows for power equipment manufacturers over the next 12 months. According to IDFC,power sector orders dropped about 30 per cent (on a year-on-year basis) to Rs 33,100 crore so far this fiscal. The figure excludes NTPC’s bulk tender orders.

“Orders for power generation equipment (including NTPC’s bulk tenders) have grown by only two per cent to Rs 430 billion (Rs 43,000 crore) and have declined by about 40 per cent excluding the bulk tenders,” the report noted.

Looking to ensure a level-playing field for domestic power gear makers especially against cheap Chinese imports,the government last week expressed its willingness to slap a 14 per cent customs duty on imported equipment.

“Such a proposal,if accepted,would be positive for domestic power equipment manufacturers like BHEL & L&T – especially in the wake of sustained competition from Chinese manufacturers,” IDFC said.

Chinese players are estimated to have received orders for 37,000 MW worth of equipment from various power producers in the country.

Domestic power gear makers including BHEL and L&T are in favour of the proposal,which has been opposed by independent power producers — most of whom import equipment from China.