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The deadline for mandatory use of only BIS-certified CRGO steel has now
been extended to March 31, 2013, giving the transformer industry some
breathing space. It has been widely debated that the appalling failure
rate of distribution transformers in India stems from the rampant use of scrap
CRGO. To some extent, this is true but it would be unfair to believe that inferior
CRGO is the only cause, and that abolishing its use will alleviate all worries.
One section of the industry believes that CRGO is an indefatigable material
that has a life of at least 75 years, many times the life of even a good-quality
transformer. India has never been able to produce CRGO locally, making the
transformer industry squarely dependent on imported material. In the 1970s
and 1980s, the cost of imported CRGO of prime quality was prohibitively high,
coercing India to use inferior CRGO. It thus created a legacy where several
Indian companies began to factor the use of scrap CRGO in the transformer
design. There were no problems, so far. It was only when unscrupulous
transformer manufacturers began the willful use of inferior CRGO and ended
up making substandard transformers that the real issue came to light.
The most intriguing part of the story is if bad transformers were made, why
were they purchased and pressed into service? All fingers point to the
antiquated procurement policies of state government power utilities that are
the biggest purchasers of distribution transformers. With the motive of being
the L1 bidder, a supplier could sell a cheap transformer to the power utility and
the utility would happily buy it as the process was under "full sanction" of the
L1 policy. If the transformer failed, the supplier would be blacklisted but the
unscrupulous element could always reincarnate as a new corporate entity
with the same crooked ethics.
Coming back to the use of only BIS-certified CRGO, it has its own practical
difficulties. So far, only four of the fifteen-odd CRGO mills in the world have
applied for BIS certification and some are in the process. However, the
certification routine—much like a typical Indian bureaucratic procedure—is
cumbersome. It is likely that the tedium of certification could frustrate the
noble intentions of a foreign mill seeking to supply CRGO to India. If only few
CRGO mills are registered, BIS-certified CRGO could get scarce leading to a
rise in prices.
While the BIS certification policy is welcome, it needs to be matched by
proactive support from the Indian government to foreign suppliers,
complemented by simplicity of procedures. At the same time, there should be
serious thinking on procurement policies. Quality of the product—and not just
the price—must be factored in.
In the CRGO case, it remains to be seen what happens post March 31,
2013—whether we have a new regime or just a new deadline.
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