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New crop of supercritical equipment suppliers

Venugopal Pillai ,  Tuesday, October 18, 2011, 17:09 Hrs  [IST]

Untitled - 50The results of NTPC's bulk tendering process for nine supercritical power units of 800- mw has churned out interesting results that could potentially define a new paradigm in the power equipment industry in India. The most striking observation has been that BHEL — India's biggest power equipment supplier failed to emerge as the lowest bidder (L1). Future supercritical plants are likely to see a new crop of equipment suppliers and an interesting competition between BHEL, domestic manufacturers that have formed joint ventures with foreign players, and of course Chinese players.

NTPC had invited separate bids for boilers and turbine-generators for nine supercritical units of 800-mw, aggregating 7,200 mw. This equipment is to be deployed in four projects spread over Orissa, Chhattisgarh and Karnataka (see Table 1).

Project Location Capacity
Lara Chhattisgarh 2x800 mw
Darlipali-Stage 1 Orissa 2x800 mw
Gajmara-Stage 1 Orissa 2x800 mw
Kudgi-Stage 1 Karnataka 3x800 mw

For the boiler package, Doosan Heavy Industries of Korea emerged as the lowest bidder. According to the tender documents, Doosan will be entitled to supply five units while BHEL will supply four units. It may be mentioned that BHEL will be entitled to supply equipment, regardless of its bid, provided it matches the winning quote. Accordingly, BHEL will be supplying four boiler packages at the L1 rate. The other aspirants for the boilers package were Larsen & Toubro, BGR Energy Systems and Thermax.

For the turbine-generator (TG) package, BGR Energy Systems was the lowest bidder for all nine units. Accordingly, BGR will be mandated to supply five units. Regarding remaining four, it is learnt that while BHEL will be supplying two units, L&T-MHI will be contracted to supply two units. When contacted, a highly-placed NTPC official confirmed the L1 winners for both packages but refrained from commenting on the final award of the packages as it was yet in process. The TG package saw nine entities in the race with five qualifying to submit their price bids. Bharat Forge-Alstom and Toshiba were the other two contenders.

Untitled - 51Aggressive bids: The winning bids were found to be very aggressive, even up to 20 per cent lower than the victorious bids of NTPC's previous round of bidding when it had ordered 11 sets of supercritical equipment of 660- mw rating. (This round of bidding incidentally is yet under finalization as some bidders have challenged their disqualification.) Doosan in emerging L1 for the boiler package had quoted Rs1.60 crore per mw while BGR Energy is believed to have quoted Rs0.94 crore per mw for the TG package.

Doosan: The boiler package deal will boost Doosan's presence in India. The South Korean company is already involved as equipment supplier to three power projects aggregating over 7,300 mw. For the 4,000-mw Mundra UMPP being developed by Tata Power, Doosan is supplying supercriticalgrade boilers. It is also supplying similar equipment for NTPC's 3x660- mw Sipat project in Chhattisgarh. For the GMR Group, Doosan has won the complete main plant package (BTG) for the 1,370-mw Raipur coal-fired power project in Chhattisgarh. Doosan Heavy Industries is moving to building a manufacturing plant in India. In February this year, it acquired the Chennai power equipment (boiler) plant of Austria's AE&E Group in a €20.5-million deal. BGR Energy Systems, based in Chennai, has traditionally been a "balance of plant" player and is now emerging as a main plant supplier to thermal power projects. To cater to main plant equipment with supercritical parameters BGR has forged an alliance with Hitachi Ltd of Japan and Hitachi Power Equipment GmbH of Germany. Two joint ventures—one each for boilers and turbine-generators—have been formed. The respective manufacturing units of these JVs are likely to go in production by 2012.

Untitled Document
  Boilers TG Sets
Doosan 5
BHEL 4 2
BGR Energy 5
*Based on reports

Reducing margins: Some analysts are of the opinion that there could be a surfeit of supercritical power equipment suppliers in the coming years. A large number of joint ventures have been formed between Indian and foreign companies to set up manufacturing capacities in the country. Apart from this, China is a huge favourite amongst private power players. In the coming 3-4 years, India's total manufacturing capacity of main plant equipment is likely to be around 30,000 mw. The longterm annual demand, on the other hand, will be in the range of 15,000-17,000 mw per year.With aggression in bidding already evident, profit margins of equipment suppliers might come under pressure, it is believed.
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