BHEL hopes Karnataka agrees to buy power so it can get part of NTPC solar tender

Bharat Heavy Electricals (BHEL)is favoured to win part of NTPC’s tender to set up 750 MW solar park at Pavagada in Karnataka’s Tumkur district but its fate hinges on the power generator's ability to sign purchase agreement with the home state and other buyers, according to an official familiar with the development. The entire process may fall through, at least for the time being, if the power producer is unable to sew up a pact with the state’s distribution utility and other buyers, he said.

The said park comprises six blocks of 125 MW each with the booty being split amongst the top three bidders. If the power purchase agreement is signed, BHEL is certain to get two blocks at least totaling 250 MW capacity. The other bidders, if they agree to match BHEL’s quote, will get to share the rest of the blocks.

The scope of work would include design, engineering, manufacture, supply, installation, testing and commissioning of solar modules and cells.

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“BHEL won’t quote rock bottom to get the tender. Margins are anyway low in this business as we are competing with the Chinese. It’s upon NTPC to try get the buyers for the power from this plant,” the official said.

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Solar power tariffs which fell to a low of Rs 2.44 per unit in May last year are slowly moving up with the official, who was quoted first, saying that cost for NTPC from the BHEL-erected plant — if, as and when it comes up — would be well in excess of Rs 3 per unit.

The government aims to have 100 GW of installed solar capacity by 2022. According to data available on ministry of power website, at the end of September last year, solar power capacity in the country was 14,771.69 MW.

The Indian power sector continues to be a pot of contradictions where 24/7 supply is still a luxury for a majority of the population. The solar market is flooded by cheap Chinese material even as the government pursues its Make in India programme.

To protect domestic manufacturers like BHEL, the Directorate General of Safeguards, part of the Ministry of Finance, has proposed a 70 percent safeguard duty on imports. An investigation is also underway to examine the case for imposing anti-dumping duties too.

“A safeguard duty of at least 30 percent is needed to make domestic manufacturers competitive with the Chinese,” an official, who has worked in both central and private sector, said.

In another strange scenario, solar panels are lying at Mumbai and Chennai ports as the authorities insist that the modules are ‘electrical motors and generators’ and should thus attract a customs duty of 7.5 percent. Importers argue that solar panel cannot be used directly to produce electricity and should instead be classified as ‘diodes, transistors, semiconductor devices and photosensitive semiconductor devices’ so as to attract nil customs duty.

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