FE Editorial : Whos got the power

Written by The Financial Express | Updated: Dec 1 2009, 03:38am hrs
That there has been a surge in the import of Chinese power equipment into Indiaaccording to some estimates these have gone up to more than a fifth of the total national capacity installed annuallyis not in question. The real question is whether the government should take steps to intervene and prevent these imports. The government has already displayed protectionist instincts by clamping down on the issue of visas to Chinese workers, many of whom were working on power projects in India. Of course, the clampdown has already taken a toll on power projects, which are now short of manpower. On Chinese equipment, the government has set up a high-level committee chaired by a member of the Planning Commission to assess the impact of such imports and recommend a plan of action. The plan of action should surely be to do nothing. For one, local power generation companies which have benefited from the lower investment costs and faster pace of project completion using Chinese equipment and Chinese workers are thoroughly opposed to any restrictions.

But the government seems more focused on the interests of the giant public sector Bhel. Bhels market share in power equipment has incidentally dipped to 53%. But the fact is that it is the slow response of Bhelwhich is still in the process of ramping up capacity from 10,000 to 15,000 MW even as its order book position has more than doubled from Rs 55,000 crore in October 2007 to Rs 1,17,000 crore by March 2009that has led to Chinese firms making substantial headway. In fact, inadequate capacity and the delay in tying up super-critical technology by Bhel had earlier led to a capacity slippage of almost 4000 MW in the Tenth Plan. But though the shortage of power equipment has been a visible bottleneck for some time now, this is soon set to change as the governments efforts to boost capacity by linking up new equipment orders with domestic production bear fruit. The decision taken by the Cabinet Committee on Infrastructure last August to go in for a bulk ordering of 11 super-critical units with a phased manufacturing programme for development of indigenous facilities is one step in this direction. These efforts will also be supplemented by market forces as indicated by the greenfield projects planned through joint ventures between L&T and MHI, JSW and Toshiba, Bharat Forge and Alstom, and GB Engineering and Ansaldo for manufacture of supercritical boilers and turbine generators, a technology that is expected to account for a major share of the power capacities installed in the Twelfth Plan. Amidst all this, the government would do well to resist the temptation to bar Chinese imports and let the market choose the best equipment.