The Heavy Industries Ministry has sought the Prime Minister’s intervention for making domestic sourcing of equipment mandatory in new Ultra Mega Power Projects (UMPP).
“This will facilitate in utilising the domestic manufacturing capacity optimally,” Heavy Industries Minister Praful Patel wrote in a letter to Prime Minister Manmohan Singh, the content of which has been seen by Business Line . If implemented, this will benefit domestic power equipment manufacturing companies such as BHEL, L&T, Bharat Forge and Alstom.
Ultra mega power projects are those having capacity to produce more than 4,000 MW. The Government is in the process of inviting bids for two such projects — Bedhabahal in Odisha and Sarguja in Madhya Pradesh. It has already awarded fourprojects (Sasan in Madhya Pradesh, Mundra in Gujarat, Krishnapattnam in Andhra Pradesh and Tiliya in Jharkhand). Patel argued that domestic manufacturers have already set up modern facilities for manufacturing coal-based power plant equipment in excess of 20,000 MW per annum, against the power addition target of an average of 14,000 MW per annum for the 12{+t}{+h} Plan period. “However, large-scale orders have already been placed with foreign suppliers by Indian power producers for many projects under the 12{+t}{+h} and 13{+t}{+h} Plans,” he said.
There is a feeling that foreign equipment have a cost advantage over Indian ones. Patel said that this has been made possible owing to financial support provided by their Governments in the form of export benefits and low-cost financing. As a result, the power equipment manufacturing capacity in India remains substantially underutilised. “The condition of domestic manufacturers will further worsen, if the present trend continues,” he said.
Making domestic sourcing mandatory will not make things difficult for the developers, as they will receive substantive support from Government by way of scarce national resources such as coal and water. The Power Ministry is in the final stage of deciding on new bidding norms for ultra mega power projects. The Ministry is expected to approach the empowered group of Ministers (eGoM) headed by Defence Minister A.K. Antony to give its nod for the new standard bidding document.
The standard bidding documents will be used not only for the two projects mentioned here, but also for other future projects. The work is on for projects in Jharkhand and Chhattisgarh.