The Hindu Business Line : `NTPC's equipment foray may face regulatory challenges'

Chennai April 11 NTPC's (proposed) foray into power equipment manufacture will not be without regulatory challenges, a senior official of Bharat Heavy Electricals Ltd, told Business Line on Tuesday.

"We welcome competition of any kind. But we would also like to see how NTPC would handle the regulatory issues that are bound to come up," Mr A.K. Mathur, Director (Industrial Systems and Products), BHEL, said in response to a pointed question on how BHEL viewed the idea of NTPC — BHEL's major customer — turning into a competitor.

Mr Mathur wondered how NTPC could possibly make a boiler or a turbine cheaper than BHEL could. If NTPC does not have the least cost equipment, the higher costs would get built into the tariff and the consumer would consequently have to pay a higher price. Will the electricity regulators allow this — we will have to see, he said.

Tiruchi unit

Mr Mathur pointed out that BHEL's Tiruchi complex, which manufactures boilers, was set up "at a royal sum of Rs 24 crore" in the early 1960s. The complex — the biggest of BHEL's 14 manufacturing plants — has assets whose depreciated value today stands at Rs 110 crore. Last year, BHEL Tiruchi produced boilers for 5,300 MW of installed power capacity. The unit earned a pre-tax profit of Rs 804 crore.

He said that BHEL planned to invest a little over Rs 1,000 crore in doubling the Tiruchi unit's capacity. (This investment indeed is the bulk of the proposed Rs 3,200-crore investment plan disclosed by the company last week.) A greenfield plant would cost not less than Rs 4,000 crore for the same capacity, Mr Mathur said.

Asked if he believed that NTPC did not understand all this, Mr Mathur merely said that the issue of NTPC getting into power equipment manufacture was "very complex".

"Nowhere in the world does a utility company manufacture its own equipment. It is like Indian Oil Corporation saying that it will produce all the equipment for its upcoming refineries," he said.

"Still, if they (NTPC) want to come, let them," Mr Mathur said, noting that BHEL was not new to competition.

Would BHEL get into power generation? He said that the company toyed with the idea some time back but gave it up.

Asked if BHEL was not to blame for delays in supply of equipment, because of which the capacity addition targets for the Tenth Plan could not be met, Mr Mathur said, "Someone should look into when the orders were placed on BHEL." BHEL maintains that orders were bunched towards the end of the Plan period.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
`Low' regains status, may intensify

Jet, Sahara maintained constant contact

Jet, Sahara — Announcement on deal today

`NTPC's equipment foray may face regulatory challenges'

US mortgage meltdown, strong rupee hit iGATE

Nestle asking farmers to shift to cow milk

Gear up for a volatile market, Chidambaram tells regulators

Equity-linked saving schemes, index funds' asset base swells

Rieter gets FIPB nod for going it alone in India

Overseas, domestic players keen on IFCI stake buy

Banks want savings deposit rate hiked

RComm, Sun TV ink pact for mobile content