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Government¬funded power projects will have to use locally¬made equipment and material procured through domestic competitive bidding, the Central Electricity Authority (CEA) has said. The move might trigger litigations from foreign players on grounds of bias towards domestic players, some experts said.

 

In a letter to the heads of central and state¬owned power generation, transmission and distribution companies last week, the CEA has asked them to abide by the new domestic procurement norm. A copy of the letter dated May 19 is with ET.

In a letter to the heads of central and state¬owned power generation, transmission and distribution companies last week, the power sector regulator has asked them to abide by the new domestic procurement norm. A copy of the letter dated May 19 is with ET

 

"Domestic manufacturers have invested heavily in technology transfer from their principals or have developed technology indigenous for creating and expanding manufacturing capacities, manpower and skill development to meet the growing demand," the CEA letter said. "Under¬utilisation of existing manufacturing facility has become a matter of concern because of large¬scale penetration of foreign equipment and material in the power sector." According to industry executives, Chinese companies have been winning most power equipment and material supply tenders, but product quality has become a concern and some projects are stuck due to it. Chinese companies have also started eating into the solar power projects pie, they said. In its letter, the CEA pointed out that all projects funded by Power Finance Corporation and Rural Electrification Corporation , including Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY), Restructured¬Accelerated Power Development & Reforms Programme (R¬APDRP) and Integrated Power Development Scheme, will have to procure equipment and material locally. 

 

In case they are not available locally, foreign players can participate in tenders only in consortium or joint venture with local players, provided they establish an Indian manufacturing facility through a phased manufacturing programme, the CEA said. Therefore, in domestically¬funded projects of the ministry of power, central public sector undertakings (CPSUs), projects funded by PFC, REC or by state power utilities, procurement of equipment and material should be made from domestic manufacturers through local competitive bidding only, the CEA said in the letter. If international competitive bidding procedure for tendering is to be resorted to, the quoted price shall invariably be in Indian rupee only, to create a level playing field.