Bhel gets Telangana projects sans bidding

The K C Rao-led Telangana government has awarded the turnkey contract of three power projects - adding up to 6,000 MW capacity and to be built at a cost of Rs 27,360 crore ($4.3 billion) - in the state to government-owned power equipment manufacturer Bharat Heavy Electricals (Bhel) on nomination basis, without floating a mandatory competitive bid. What's more, it has also taken an in-principle decision to award all upcoming power projects to the government firm on a nomination basis, without calling for competitive bids.

The move has raised eyebrows of private equipment manufacturers such as Alstom, Bharat Forge, Larsen and Toubro, Toshiba-JSW, among others, which are likely to approach the competition watchdog - Competition Commission of India (CCI). They are worried given that the newly formed Telangana state is likely to award projects worth Rs 90,500 crore to raise its electricity capacity from 4,320 MW to 25,000 MW in the next four years.

Justifying the Telangana government's decision to award power projects to a central public sector undertaking (CPSU), state industries and energy secretary Arvind Kumar told TOI, "Telangana state inherited a massive power deficit situation at the time of its formation on June 2, 2014. Realizing that self sufficiency in power is a precondition for any infrastructure development, the state government, to overcome the deficit in power in the shortest possible time and to achieve self-sufficiency in power generation and in view of the fact that it was to be between a state PSU (TSGENCO) and GOI PSU (Bhel), took a conscious decision to award all upcoming state power projects on a nomination basis to a government-owned PSU." Justifying the price, Kumar said the price discovery by Telangana Power Generation Corporation (TSGENCO) along with Bhel was based on some of the most competitive contemporary power projects of similar size elsewhere.


A Bhel official confirmed to TOI that the CPSU has signed an MoU with TSGENCO to execute 6,000 MW of power projects in the state. Bhel shares closed up marginally at Rs 285 in a firm Mumbai market on Wednesday.

"The SC, in its landmark judgment while cancelling 204 coal blocks on a nomination basis, asked the government to allot those coal blocks through transparent and competitive bids. We are denied a level-playing field. How do you arrive on a price without calling for competitive bids?" questions an official of a leading private sector power firm on the condition of anonymity.

Industry body FICCI, too, has taken up the issue. "Placing such power plant orders on nomination basis without following the competitive bidding route is clearly restraint of trade, anti-competitive and against the Prime Minister's 'Make in India' initiative as it violates the level-playing field and leads to idling of indigenous manufacturing capacities," said FICCI secretary general A Dildar Singh in a letter to Union power minister Piyush Goyal.

TOI has reviewed a copy of the letter, which requested the power ministry to step in and halt the 'unfair' practice of awarding supercritical coal-fired power plants by central/state power utilities to PSU's on a nomination basis.

"We request the power ministry to advise state power utilities to invite bids on EPC basis under international competitive bidding (ICB) for upcoming power projects. The consumers of electricity will ultimately stand to gain as ICBs will encourage efficient pricing and provide greater choice to equipment buyers," said the FICCI letter.

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