GOI ruled on July 24th that power plant with foreign equipment would not be supplied coal by state-owned mines. This may be the result of hard lobbying by BHEL. Seriously affected would be Chinese companies who want to tap India’s lucrative market for small-scale power generation equipment.
The ruling may jeopardize the eight power projects in the country that have contracted with Chinese equipment manufacturers and now risk being denied coal supplies to fuel their plants. The Chinese companies are the only foreign ones with a significant presence in the Indian market for supplying equipment to power projects with a unit size of less than 200MW. However a senior Government official has said that those power plants that have already placed orders with Chinese manufacturers would be taken care of.
BHEL, which accounts for 60% of the power equipment market, has been facing intense Chinese competition for orders from bigger projects. The government had announced in April that it plans to restrict overseas equipment manufacturers from bidding for orders unless they set up a factory in the country.
Bhel, India’s largest maker of power generation equipment has raised concerns about the alleged poor quality of equipment supplied by the Chinese, following which the Central Electricity Authority, the top power sector planning body, formed an internal group to conduct a technical audit of such equipment in May.
The power ministry has justified its decision on the grounds that it was seeking to prevent inefficient power plants with poor heat rates from foreign countries finding their way into the country.
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