NTPC lands up in another controversy over tenders

The specifications for the gas-based power plants originally were supposed to have the capability of running on naphtha till such time that LNG or natural gas supplies wereavailable for the project — in other words, naphtha was meant to be a `bridge’ fuel — the early morning fax stated that the bridge fuel could be high speed diesel (HSD) as well as naphtha instead of just naphtha alone.

It is perhaps more than a coincidence that ABB stands to benefit from this change, since ABB has greater expertise in producing equipment running on diesel than on naphtha. BHEL, on the other hand, specialises in naphtha-based equipment.

NTPC’s managing director, Rajinder Singh, refutes these allegations, pointing out that this was done since it was demanded by most international contestants — during the first round of bidding, Singh says, only BHEL participated, as the other bidders were more competent with the use of HSD as fuel. “And BHEL’s bid had so many deviations that we were forced to declare it non-compliant without opening the bid,” Singh stated.

“After this, we discussed the requirements of NTPC with all prospective bidders like ABB, BHEL, GE and NHI to incorporatechanges in our requirements to accommodate these companies so that we introduced some competition in the tender,” he added.

He also refuted the point that the change in fuel specification was done to accommodate ABB because “even ABB has submitted the tender with naphtha as the fuel so there is no question of changing the fuel specification to HSD to suit them,” Singh emphasises. “And the last minute change was necessary because we got government clearance for use of HSD at the last minute,” he added.

But if Singh felt that it was essential to float a new tender with HSD as a bridge fuel, it doesn’t explain why he went ahead with the tender since he hadn’t got government clearance till then. Nor does it explain why ABB bid this time around, since till 5 that morning, it wasn’t clear that diesel could be used as a fuel instead of just naphtha.

What’s even more strange is that the `loading’ factors used by NTPC for its bids — since the specifications of bids given by various parties can differ fromwhat has been asked for in several ways, a certain weightage or `loading’ is given to these `deviations’. This is then added to the basic bid price, to get at a bid price which is then uniformly comparable for all bidders. Naphtha, for example, is cheaper than diesel, and so to make naphtha-based bids comparable with diesel-based ones, the bid is `loaded’.

The problem, however, is that the way the `loading’ has been done, makes it comparatively easier for ABB to get the contracts for Kawas and Gandhar — they have bid for only these two power stations in Gujarat and not for the UP-based ones.

As per the 5 am fax, the `loading’ factor is Rs 48,153 per mw for Gandhar, Rs 1.3 lakh for Kawas, Rs 10.15 lakh for Auriya, and Rs 12.95 lakh for Anta. Essentially what this means is that you multiply this `loading’ factor by the plant’s net output in mw, and then add on the resultant cost to the original bid price.

In the case of the Gandhar project, then, ABB’s base bid will have to be increased or loaded by Rs3.4 crore, based on a Rs 48,153 loading. If, however, the higher Anta loading of Rs 12.95 lakh is to be used, ABB’s base bid will have to be increased by Rs 94 crore. Obviously, then, the `loading’ factor used could be critical while finally evaluating the two bids — there will be other `deviations’ by both companies as well, so the loading used for each such `deviation’ is critical.

For Kawas ABB has quoted a price of Rs 1,290 crore while BHEL has quoted Rs 1,600 crore. In the case of Gandhar, ABB’s price is Rs 1,325 crore and BHEL is at Rs 1,650 crore. Anta and Auraiya where BHEL is the sole contender, the price it has bid is Rs 1,625 crore.