BHEL has lost the Rs. 9,000 crore order for providing equipments to RPL's 4,000MW Krishnapatnam UMPP, over pricing issues. BHEL quoted Rs. 2.6 crore/MW, while RPL stuck to Rs. 1.9 crore/MW. China’s Shanghai Electric Company is expected to get the order.
Chinese equipment are cheaper than Indian ones by 15-20%. However, experts believe that such equipment are not very competitive in terms of technology due to issues with their design, leading to higher operating and maintenance costs
The power ministry has been trying to restrict overseas equipment makers from bidding for domestic projects unless they have a manufacturing base in India, and are also denying coal supply to electricity plants with foreign equipment, applicable to all new power projects in the country effective from 30 April 2008.
We view the news as slightly negative for BHEL in the short-term, due to the ever-increasing concerns of growing competition. However, GoI's increasing focus on restricting Chinese companies, more so after these developments, is likely to improve BHEL's prospects in winning the equipment orders in future.
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