By Noor Mohd, IANS
New Delhi : In what could emerge as a windfall for Bharat Heavy Electricals Ltd. (BHEL), the government is looking at a proposal to remove some major conditions on developers who want to avail themselves of fiscal sops for building mega power projects.
Under the policy governing mega power projects, state-run and private players have to resort to international competitive bidding while awarding contracts to suppliers of equipment such as boilers and turbines for obtaining fiscal sops.
Now, the finance ministry is looking at a proposal where private players would continue to get the fiscal sops under this policy if the developer awards such contracts to BHEL, officials said.
“We are pushing this proposal since we want BHEL to indigenise the technology it has secured for boilers and turbines from some global manufacturers,” a senior official of the Department of Heavy Industry said.
“Such technology has been sourced from companies like Siemens and Alstom under licensing arrangements and it is extremely important in the country’s interest that it is indigenised,” the official told IANS.
Officials of the state-run company have told its administrative ministry that it will be able to optimise its production costs when it starts manufacturing such equipment on a large scale.
“For this, the supercritical main plant package must be awarded to BHEL on a nomination basis instead of international competitive bidding,” the official added. “We will then know the order volume and apportion costs accordingly.”
He also said that the exemption from the conditions is being sought for the first 10 units under the mega power project policy after which BHEL will be in position to participate competitively in the international bidding process.
The technology which BHEL has obtained is for turbines and boilers that can handle a project of the size of 800 megawatts (MW), which typically entails an investment of around Rs. 40 billion ($1 billion).
“Almost 55-60 percent of the project cost is towards equipment like turbines, boilers and coal-handling plant,” a senior official of BHEL said.
Since the minimum capacity for thermal mega power projects is 1,000 MW, the projects where BHEL can supply its equipment need to have a minimum capacity of 1,600 MW and multiples of 800 MW thereafter, officials said.
Earlier, the main state-run developer National Thermal Power Corp (NTPC) had declined to award turbine and boiler contracts to BHEL on a nomination basis since it was denied sops under the mega power policy.
The power ministry has projected additional generation capacity of some 78,000 MW under its 11th Plan programme (2007-08 to 20012-13), of which 53,000 MW is to be based on coal.
Most of the large-sized coal-fired projects are expected to use 800-MW supercritical equipment, following a request from the power ministry.
For example, under its 11th plan capacity addition programme, NTPC has lined up large-sized coal-based projects which have a capacity of around 4,000 MW each and plans to use the 800 MW supercritical technology.
“Supercritical power plants are supposed to have a relatively higher energy efficiency level and are more environment-friendly,” a power ministry official explained.
Also, under the Kyoto protocol, developers of supercritical power plants from developing countries like India are entitled to carbon credits, which they can trade in international market and generate an additional stream of revenue.