Abb To Boycott Bidding For Price Preference

ABB-Alsthom Power's managing director Krishna Pillai yesterday said they would

not bid for any of the National Thermal Power Corporation (NTPC) projects which have purchase price preference (PPP).

Speaking to reporters yesterday, Pillai said "we will not bid for the projects if NTPC applies PPP for its projects."

NTPC recently extended the equipment supply bid dates for both the 1,000 mw Rihand as well as the 50 mw Ramagundam power projects. The extension of the bids was on account of the move to extend the PPP for an additional two years after it lapsed on the 31st of the March.

 

Pillai said, in case the government does extend the PPP for another two years, then companies like ABB-Alsthom would have to look at other business opportunities where the PPP does not apply. This, he said, would be the state sector projects and other smaller projects including IPPs.

Pillai also said they have indicated this problem to the NTPC and suggested that they should clarify their stand on this issue. He said NTPC has done neither.

On the Rihand and Ramagundam bids, even though NTPC initially indicated that equipment supply for these projects would be with PPP, sources said once PPP had lapsed, NTPC is not sure whether it would or would not be extended further.

All equipment companies are not in favour of extending the PPP as they claim that domestic public sector companies get an undue advantage while bidding for the projects.

Even the power ministry had suggested to the ministry of heavy industry that the 10 per cent price preference would result in lack of competition and will have serious consequences pertaining to procurements of power sector PSUs.

Both the power ministry and the NTPC are not in favour of any extension of the PPP and have already voiced their opposition on this matter while the administrative ministry is keen for another two year extension, sources said.

The power secretary V K Pandit has already indicated this to the secretary heavy industry and pubic enterprises had suggested that the extension purchase price preference policy should be decided by the cabinet and not be based on the recommendations of the CoS .

The purchase price preference policy was originally introduced in 1992 for an initial period of three years to enable public sector enterprises to adjust to the new liberalised environment of competitiveness and efficiency. The price preference to central PSUs was last extended in 1998.

Even though the ministry of heavy industry and pubic enterprises is in favour of extending PPP for another two years opinion is being sought from the commerce as to whether extension of PPP would go against the government procurement agreement under the WTO. The ministry would also refer the matter to the finance ministry which had also earlier objected to the extension of the PPP.

THE STAND-OFF

* ABB Alsthom Power will not bid for NTPC projects if it applies PPP for the projects

* NTPC had extended the equipment supply bid dates for the 1,000 mw Rihand and the 50 mw Ramagundam power projects

* The extension of the bids was on account of the move to extend the PPP for an additional two years after it lapsead on March 31st

* If the government extends the PPP for another two years, then companies like ABB--Alsthom will have to look at other opportunities where the PPP does not apply

* Most equipment companies are not in favour of extending the PPP

* They claim that PSUs get undue advantage while bidding for projects

* Both power ministry and NTPC are not in favour of any extension of the PPP and have already voiced their opposition on this matter

* Power ministry had suggested to the ministry of heavy industry that 10% price preference will result in lack of competition and will have serious consequences pertaining to procurements of power sector PSUs

* PPP was introduced in 1992 for 3 years to enable PSUs to adjust with the new liberalised environment of competitiveness

* The price preference to central PSUs was last extneded in 1998