China equipment ban: Power plants seen missing emission cut deadlines again

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Published: July 3, 2020 3:40 AM

About 14,000 MW of power plants around the national capital region have already missed the first deadline of installing FGDs by December 2019.

The risk of default has increased “due to impact of the disruptions caused by Covid on global supply chains and a growing clamour for the boycott of products from Chinese companies.

The ban on using Chinese equipment is seen to defer the process of installing pollution-reducing devices in power plants, as local companies which manufacture these machines are dependent on imports of components from the hostile neighbour. According to industry sources, about 20-30% of these components are made by local manufacturers and the balance comes from China.

The current uncertainty is also delaying the bid submission process for setting up the pollution controlling machines as the domestic industry in contemplating about changing their supply lines. Coal-based power plants across the country are in the process of installing flue gas de-sulphurisation (FGD) units and electrostatic precipitators (ESP) and upgrading existing equipment to meet the environmental norms. The Association of Power Producers (APP) has sought an extension of the 2022 deadline to install the equipment from the power ministry, pointing out that 77% of the plants have not yet awarded the contracts to install FGDs and ESPs, and are likely to miss their timelines.

The risk of default has increased “due to impact of the disruptions caused by Covid on global supply chains and a growing clamour for the boycott of products from Chinese companies (the biggest and most cost effective suppliers of FGD equipment) in the aftermath of the recent clash”, APP’s letter, reviewed by FE, stated.

“A push back by 2-3 years in timelines would provide an excellent opportunity for implementing ‘Atmanirbhar Bharat’ by opening a manufacturing order book size of about Rs 48,000 crore for the domestic industry,” APP pointed.

About 14,000 MW of power plants around the national capital region have already missed the first deadline of installing FGDs by December 2019. Another 26,330-MW power capacities are required to set up FGD units in 2020, 64,268 MW in 2021 and 64,055 MW in 2022. CLP India’s 1,320 MW Jhajjar power plant, a unit of Hong Kong based China Light and Power, is currently the only station to have commissioned such equipment. It requires an estimated Rs 27 lakh-45 lakh per MW for FGD installation, necessitating a rise of 0.62-0.93 paise/unit in power tariffs.

As much as 9,570 MW of the currently under construction power plants — all from the private sector — have contracted with Chinese companies for supplying boilers, turbines and generators. Total under construction capacity is 15,861 MW, of which the private sector comprises 12,245 MW. In the last ten years, 22,420 MW of super critical power plants have been commissioned and of these 12,540 MW were built on Chinese equipment, including Adani’s Mundra and Tirora units, CLP India’s Jhajjar plant, Reliance Sasan and Vedanta’s Talwandi Sabo project. Other state-run projects where Chinese equipment have been installed are DVC’s 600 MW Raghunathpur plant in West Bengal, Tamil Nadu’s 600 MW Mettur project and the 600 MW Kalisindh plant in Rajasthan.

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