NTPC likely to float Rs 18,000-cr tender

Cabinet set to clear bulk order for supercritical units.

India's biggest power producer, NTPC Ltd, is likely to get Cabinet approval to invite tenders worth Rs 18,000 crore for procurement of nine supercritical units of 800 Mw capacity each.

The bulk order of boiler and turbine units packages of an overall 7,200 Mw capacity is aimed at phased induction of the new supercritical technology in the power sector. Supercritical plants burn less coal to generate same amount of power and are thus considered environment friendly.

“The tender will be out in a month after the Cabinet’s approval. The orders will be placed within nine to 10 months,” said a senior official from NTPC. He, however, declined to specify the cost benefit that will accrue as volume discount to the Maharatna PSU from the bulk tender. “While it is not possible to quantify the cost benefit, our biggest gain will be the participation of global players,” he said. Experts believe that large participation, especially, by bigger companies, will further increase the cost savings for NTPC. The average cost to set up a supercritical power generation unit in India is around Rs 5.5 crore per Mw, of which equipment cost alone accounts for roughly Rs 2.5 crore.

On being questioned whether NTPC has tied up funds for equipment procurement, the official said, “As far as equity is concerned we have no problem at all. Our own reserves are enough.”

While four of the nine supercritical units would be set up in Orissa, three would be set up in Karnataka and the remaining two in Chhattisgarh, said the note on the bulk tender proposal floated by the ministry of power for the consideration of the Cabinet Committee on Infrastructure (CCI).

The note prepared in August, specifies phased domestic manufacturing as a condition in the tender. The thermal power corporation had floated a similar tender, Rs 25,000 crore, for procurement of 11 supercritical units of 660 Mw each last October. This included nine units for NTPC’s own coal-based power plants and two units for the state-run Damodar Valley Corporation. The company expects to finalise the award for the tender, floated for the second time earlier this year, by the end of the current financial year, chairman and managing director Arup Roy Choudhury had recently said.

Experts believe the tender will invite competitive quotes by companies, thereby, increasing NTPC's cost savings. "Currently there is enough competition within the domestic market with many players coming up now. This tender is expected to bring down the benchmark price significantly, even to as low as what the Chinese manufacturers quote. As another benefit, the companies would be more confident in setting up manufacturing bases as it has been made a condition," said a senior analyst from an accounting and consultancy firm.

NTPC has installed power generation capacity of 32,000 Mw and plans to ramp it up to 75,000 Mw by 2017. The government had embarked on a strategy of phased indigenous manufacturing programme for supercritical equipment suppliers in a bid to secure domestic supply of spares and cut the country’s rapidly expanding carbon footprint. While supercritical units would account for a minuscule portion of the likely 62,000 Mw of power capacity being installed in the current Plan period, the government wants to ensure at least 50 per cent of the 12th Plan capacity to come from supercritical units.