Bharat Heavy Electricals Ltd (BHEL), India’s largest power equipment manufacturer, is blaming the tender norms specified by the government for losing orders of 18,000 Mw capacity to Chinese competitors in the last two years.
It said the power equipment tenders favour the 300 and 600 Mw unit sizes, where Chinese manufacturers like Dongfang and Shanghai Electric Company have better economies of scale, while BHEL has advantages only in standard unit sizes of 250 Mw and 500 Mw.
“Why should the government tenders specify sizes that only the Chinese make and then ask us to quote?” said K Ravi Kumar, chairman and managing director of BHEL, adding that this has led to an increase in estimated project costs.
“Each of our projects is custom built. That is also our weakness. Even if it is a standard design, our engineers will look at it from scratch, see the wind load, the seismic factor, etc. This is one reason why our costs are higher than the Chinese,” he said.
But power ministry strongly denied any tweaking of tender norms to favour Chinese companies. “There is no discrimination. BHEL losing out to Chinese manufacturers is history. We have to protect the interest of all manufacturers to promote competition,” said Power Secretary Anil Razdan.
Industry experts denied that such a favour by the government to a specific manufacturer exists. “In fact, tenders specify a range of equipment capacity like 250-300 Mw or 500-600 Mw. This is done only to promote competition among the players by providing flexibility in choice,” said a senior official from the Central Electricity Authority, the apex body for power sector planning.
While the power ministry provides the guidance regarding equipment capacity to be installed in a power project like those dealing with the provision of flexibility in unit sizes of equipment, the exact configuration of the total capacity is determined by the power project developer, the CEA official added.
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Domestic power equipment manufacturer Larsen & Toubro (L&T), one of the biggest competitor of BHEL in the local power equipment market, has however denied that current tender norms favour Chinese suppliers.
“If you can manufacture 500 Mw, why can’t you manufacture 300 or 600 Mw? If you are not equipped enough to absorb the technology, why are you taking the contract?” asked a senior company official.
At least one Chinese manufacturer of power equipment — Dongfang Electric Corporation (DEC) — also believes that its ability to deliver a whole range of equipment, from the lowest capacity of 250 Mw up to 500 Mw and above, provides it flexibility to tap the Indian market.
“We are more cost competitive because we supply a range of equipment. That is one advantage we have above BHEL,” said Wen Ya, Dongfang’s chief representative in India.
Experts too consider the allegation by BHEL to be a speculation.
“Configurations of capacity of equipment in tenders are rarely frozen. Also, the total deployment of Chinese equipment in the country is not as huge to have cost BHEL 18,000 Mw capacity orders. BHEL should concentrate on being able to match prices,” said a senior analyst from an accounting and consultancy firm who did not wish to be named.