Domestic equipment policy only for transmission and distribution projects, clarifies CEA

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New Delhi | Published: July 8, 2016 6:35:34 AM

The ambiguity had put several power developers in a bind. They argued that the country lacked capacity to meet the domestic demand for generation equipment

In what would clear the air for coal-based power developers, the technical arm of the power ministry, Central Electricity Authority (CEA), has clarified that its advisory for use of domestically manufactured equipment for government-funded power projects is limited to transmission and distribution equipment and does not cover generation machinery.

The ambiguity in the notice had put several power developers in a bind. They argued that the country lacked capacity to meet the domestic demand for generation equipment. The coal-based capacity in the country has grown by an annual 20 gigawatt over the past 4 years. This is not matched by the domestic boiler, turbine, generator (BTG) makers, with the largest company, state-run BHEL, has struggled in maintaining delivery schedules. BHEL has an annual capacity of about 20 GW.

The authority issued a correction to its earlier advisory released in May which exhorted state-run agencies, both transmission and distribution utilities, to use equipment from local manufacturers citing under-utilisation of such capacity that had invested heavily in expanding capacity and developing indigenous technology.

“The advisory was always limited to distribution and transmission equipment but it wasn’t explicitly mentioned in the earlier order. However, we felt it needed clarification after we received queries from power developers asking if it included equipment related to power generation also,” SK Ray Mohapatra, chief engineer, CEA, told FE. Mohapatra added that the notice was meant to be a guideline and it wasn’t yet clear if state or central agencies would incorporate the suggestions.

In the earlier order, CEA had said that Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) should ensure that utilities follow a transparent tendering mechanism in procurement process for central government funded schemes such as Deen Dayal Upadhyay Gram Jyoti Yojana (DDGJY) and Integrated Power Development Scheme (IPDS) for which they are the nodal agencies. The DDGJY and IPDS schemes have been allocated nearly R1.5 lakh crore for strengthening and modernisation of rural and urban distribution infrastructure.

It had also said in absence of domestic manufacturing capability in respect of specific equipment, foreign manufacturers may be allowed to participate in the tendering process, provided such an entity formed a joint venture with an Indian bidder. “Foreign manufacturers, in such cases, shall have to establish the manufacturing facility in India within a specific time frame and shall ensure transfer of technology government by a phased manufacturing program,” CEA had said in its notice.

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