Row over bids for NTPC project

According to the specifications for NTPC’s tender, any deviations on certain critical parameters should be accompanied by a cost estimate for the removal of this specification which would have to be borne by the bidding company. Both ABB-CE as well as Foster Wheeler had not given any prices for the withdrawal ofthese specifications and hence were declared “non-responsive” as per NTPC’s own assessment. Despite this, NTPC ordered re-bidding for the tender, which was scheduled for May 31.

NTPC chairman and managing director Rajinder Singh however refuted these charges saying that BHEL has been a supplier of long standing with the NTPC and we have no reason to start favouring other companies now. “So far as the evaluation report is concerned, BHEL was also not conforming to several technical specifications in the first instance which is why we decided to treat all the bids as non-compliant, and gave them a second opportunity to bid,” Singh said. He also said that the April evaluation report was incomplete as by then a decision had been taken for a fresh bidding in the project.

In the second round, Foster Wheeler dropped out of the race leaving only ABB-CE and BHEL vying for the tender. The second round also saw significant changes in the composition of import content for the tender by ABB-CE. In the first bidwhile ABB-CE mentioned the value of the import content for the tender at $187.89 million which worked out to nearly 69 per cent of the total value of equipment, in the second bid in May, the company pegged its import content at $ 19.29 million which is only 7.17 per cent of the total value of the equipment order. The remaining 93 per cent of the equipment for the tender would be manufactured by the Indian assignee of ABB-CE, ABL (formerly ACC-Babcock Ltd now bought over by ABB).

The reason for the manipulation of this composition was that the tender, which had been floated along the World Bank guidelines, is required to add the value of import tariff or 15 per cent whichever is lower to the price quoted by MNCs.

In the December round of bidding, ABB-CE emerged as the lowest bidder with a price quoted at Rs 1,302 crore as against BHEL’s price of Rs 1,388 crore. This did not include the price differential calculation which would have pushed up the price quoted by ABB-CE by nearly Rs 120 crore pricing ABBout of the tender.

This was countered by ABB on the one hand which reformulated its bid in the second round by reducing the import content. Apart from this, the Ministry of Power on its part also directed NTPC, at the behest of the Power Minister P R Kumaramangalam, through a letter dated June 6, to exclude the price differential clause as it was “anarchic and anti-market”.

Even if it is assumed that ABL would now produce the equipment in India, the sick company’s capability to manufacture 500 mw steam boilers (the main equipment in the tender) stands to question as these have never been manufactured by the company before. This also violates the experience clause in the tender which states that the bidding company should have at least two 500 mw boilers in operation for two years to be eligible to apply for the tender.