Ministry-NTPC row gets murkier

Ministry-NTPC row gets murkier
ENS ECONOMIC BUREAU

NEW DELHI, FEB 21: The stand-off between NTPC and the Ministry of Power over the bids for four gas-based power projects has taken a turn for the worse, with power secretary VK Pandit pulling up NTPC for, according to him, distorting the ministry's stance. Pandit has also stated that NTPC's actions could lead to a sharp rise in the cost of these power plants. The secretary's rebuke follows a letter from NTPC chief Rajinder Singh a few days ago.

Pandit's rebuke comes on top of a very public display of the NTPC-ministry fight. On the 15th, there was a dinner to announce a new joint venture of NTPC with ABB to renovate and modernise power plants, but none of NTPC's board members including its chief attented this the only exception was A. Palit, who is the head of the joint venture. Apparently, NTPC's directors didn't attend the dinner because Power Minister P.R. Kumaramangalam was to be there.

The genesis of the problem goes back to NTPC inviting tenders for four gas-based projects at Anta, Auriya, Kawasand Gandhar towards the end of 1998. Changes in government policy ensured the bids for Anta and Auriya were opened only in March 1999. While only BHEL bid for these power plants, the bid was rejected as being `non-responsive', since BHEL had substantially deviated from the specifications in the tender. The same thing happened in the case of Kawas and Gandhar, where both the Siemens-BHEL consortium and ABB bid. NTPC then had meetings with all bidders to understand why so few participated in the bids, and why their bids were deviating so much from the specifications. The bids were floated once again, but were again declared `non-responsive'.

By this time, the ministry goaded NTPC into re-examining its basic tenders, to see if the specifications in it were realistic or not. A 3-member panel – S.J. Coehlo, T.L. Shankar, and V.K. Sood was formed by NTPC from its own board, and this ruled that the specifications in the tender were indeed unrealistic. This view was corroborated by Central ElectricityAuthority.

The power ministry then asked the law ministry for an opinion on whether a re-bid was essential, since the Central Vigilance Commission has forbid this. Kumaramangalam, however, was in favour of negotiations instead of rebids, since according to him, global prices are rising and so more tenders will lead to more delays.