Source power gears from cos with base in India

Chinese equipment manufacturers are the only major gear suppliers to Indian projects that do not have a base in the country,resulting in apprehensions being raised about their service capabilities and ability to make spares available in the future. Earlier,an August 23 decision of an Empowered Group of Ministers had categorically ruled that those bidding for projects such as the ultra mega power projects UMPPs offered under the case II competitive bidding route will have to necessarily source equipment from domestic manufacturers. Interestingly,the first two UMPPs in the country Tata Powers Mundra and Reliance Powers Sasan projects use imported equipment from South Korea and China respectively.

In another blow,in July,the Reserve Bank of India RBI had discontinued the facility of external commercial borrowings denominated in Chinese renminbi. Indian infrastructure firms were earlier allowed to raise up to 1 billion via this route. Prior to this,mid-last year,the Cabinet had approved a 21 per cent duty on imported gear,primarily as a response to lobbying by domestic equipment makers.

Apart from state-owned Bharat Heavy Electricials Ltd,those likely to benefit from the increasing restrictions on Chinese gear manufacturers include the Lamp;T-Mitsubishi Heavy Electric combine,Bharat Forge-Alstom,Toshiba-JSW and the Italian firm Ansaldo,all of which have either set up greenfield supercritical boiler and turbine manufacturing facilities in the country or an in advanced stages of doing so. The fresh advisory to all state-owned generating utilities,issued by the Central Electricity Authority on August 30,2013,states that the Power Ministry has decided to extend its February 2010 advisory,mandating that the condition of setting up of phased indigenous manufacturing facilities be incorporated in the bids to be invited for boilers and turbines of new supercritical projects,for another period of two years. As a result,the 2010 advisory,which expired in October 2012,would now be in force till October 2015.

According to the latest equipment ordering status for the 79,000 MW of fresh capacity slated to come up in the Twelfth Plan 2012-17,Chinese vendors have bagged contracts for supplying electro mechanical equipment adding up to 28,740 MW. Of these,96 per cent,or 27,540 MW,are from private project developers.

The restriction of equipment vendors without a manufacturing base comes at a time when specific instances of underperformance of the equipment deployed at various plants in India. These include Vedanta-acquired Balcos 540 MW plant and the turbines at the 600 MW Pathadi thermal power station.