DVC, Bhel battle over pricing of project earmarked for Delhi

Kolkata, May 30 | Updated: May 31 2007, 05:30am hrs
Damodar Valley Corp (DVC) and Bharat Heavy Electricals Ltd (Bhel) have locked horns over the pricing of the main plant package for the 500mw Bokaro A and 1000mw Koderma thermal power projects.

DVC wants the government-owned Bhel to benchmark its contract price against the price quoted by the consortium of Reliance Energy and Shanghai Electrical for the 1200mw Hissar project in Haryana. But Bhel claims the contracts are not comparable because its plant package and equipment are of much higher quality.

This tussle is delaying in issuing the letter of award (LOA), which in turn would delay in commissioning of the projects.

Bhel officials told FE that DVC has missed three deadlines to give them the LOA for the 500mw Bokaro A project. The synchronisation of the unit with the 630mw Bokaro B is supposed to take place in March 2010 and the commercial operation to start by June 2010.

The power ministry does not want any delays, as this project is supposed to supply Delhi during the Commonwealth Games in 2010.

DVC officials said that while most of utilities are setting up plants at Rs 3.5 -- 4 crore per megawatt, DVC may end up with Rs 4.5-5 crore if it agrees to Bhel's pricing.

DVC needs to cut down its capital cost as well as recurring costs as it is no longer free to fix its own power tariff. DVC has been brought under the central electricity regulatory authority's regulated tariff regime from October 2006.

For the 1000mw Koderma power project, which is also supposed to meet Delhi's power requirement during the Commonwealth Games, both DVC and Bhel have agreed on a contract price for supply of the main plant package to the project. DVC would issue a LOA to Bhel soon for starting work on the project, DVC officials said.

Meanwhile, union power secretary Anil Razdan has directed DVC to complete unit-1 and 2 of the Mejia expansion (2x500mw) by September 2009 and December 2009 respectively. The stipulated timeline is three months earlier from the pre-decided dates.

According to DVC officials, the power ministry has set up a rigorous mechanism to monitor implementation of all DVC projects for timely commissioning.