India plans to get Bhel to bid for BD power project

In an attempt to thwart China’s plan to corner the construction contract for a $1.68 billion power project in Bangladesh that India is helping its neighbour build in the electricity-starved country, India wants Bangladesh to allow state-owned Bharat Heavy Electricals Ltd (Bhel) to bid for it.

As part of India’s strategy to exert economic and strategic influence in the neighbourhood by developing infrastructure, state-owned NTPC plans to set up coal-based power projects in Bangladesh.

As part of India’s strategy to exert economic and strategic influence in the neighbourhood by developing infrastructure, state-owned NTPC Ltd plans to set up coal-based power projects in Bangladesh. Accordingly, bids for the 1,320 megawatts (MW) Khulna project, also termed the Maitree (friendship) project, that may have a final capacity of 2,640MW are to be called shortly. According to preliminary bid conditions yet to be finalized, Bangladesh Power Development Board (BPDB) wants to put in a qualifying condition that the prospective bidder must have a 500MW running unit overseas. While this may allow Chinese, Japanese, Korean and European manufacturers to compete for the tender, India’s Bhel doesn’t qualify.

“The bids for the construction of Bangladesh-India Friendship Power Company (Pvt.) Ltd, which is being developed in an equal joint venture by NTPC and BPDB, are to be called shortly,” a person aware of the development said, requesting anonymity. “The tender documents which are yet to be placed may have the 500MW overseas running unit condition. While this may allow Chinese, Japanese, Korean and European manufacturers to compete for the tender. NTPC will oppose it to give Bhel a chance to compete.” Another person aware of the development, also requesting anonymity, said, “Bhel has had this discussion with NTPC.

NTPC will ensure that Bhel will be able to bid for the project. Apart from this condition of 500MW running unit overseas, other conditions can be introduced to facilitate Bhel’s participation.” Queries emailed to the spokespersons for India’s ministries of external affairs and power, Chinese embassy and Bangladesh High Commission in New Delhi, and BPDB remained unanswered till press time. A Bhel spokesperson in an emailed response said, “Bhel is unaware of any such development.” An NTPC spokesperson in an emailed response said, “The QRs for the bid documents shall be finalized and approved by board of Bangladesh-India Friendship Power Company Pvt. Ltd.

Participation of Indian manufacturer along with other international players in the tender will be a matter of pride for all of us.” India and China are in a race for the world’s resources as they seek to fuel economic growth. Indian efforts to step up energy diplomacy by engaging with Myanmar, Bangladesh and Sri Lanka haven’t had the desired result though. China is becoming increasingly influential by wielding its growing economic might without being constrained by the need to consider its own local constituents. Experts stress the strategic importance of the project and the associated benefits from it. “It was always agreed that there will be a international tender. The contract will be given to the best bidder.

If the project goes to China, there may be a problem,” said former power secretary P. Umashankar. “The project has strategic importance for relationship between the two countries. It will be the largest such project in Bangladesh and its impact will be felt there as it has the potential to generate goodwill for India. Most of their capacity is from diesel units which has a high cost associated with it. In comparison, the tariff from this project will be of optimal value,” Umashankar added. In Bangladesh, a neighbour that is key to Indian attempts to develop the region, even the India-friendly Sheikh Hasina regime hasn’t stopped the Chinese from making their presence felt. Mint reported on 18 November 2011 about India’s plan to develop the Khulna power project hanging in the balance after differences emerged between the two sides over tariffs and the use of Chinese equipment.

NTPC and BPDB later signed a joint venture agreement for the imported coal-based project in January 2012. Power purchase and implementation agreements were signed by NTPC in Bangladesh in April last year for the Khulna project, which is expected to be commissioned by 2018, with the entire power to be supplied to Bangladesh. The National Democratic Alliance government has stepped up its efforts to boost relations with Bangladesh, including a new visa policy, as Prime Minister Narendra Modi has reiterated his government’s neighbourhood-first foreign policy and promised to strengthen ties with all neighbours in South Asia. India is prepared to supply an additional 100MW of electricity to Bangladesh on addition to the 500MW it was supplying.

According to information available on the website of Indian High Commission in Dhaka, “Land filling at site is 70% complete. Site levelling of main plant area (identified as priority area) has mostly been completed and contract for main plant fencing activities has been awarded.” “Business Execution Concept of the Company has been finalized. Global Expression of Interests (EoIs) were invited from experienced consultants to provide Owner’s Engineer Services to the JV Company for project development.

Responses are being scrutinized for further action,” the website added. In a separate development, NTPC on Friday said net profit for the quarter ended 31 December rose 7% from a year earlier as it benefited from higher sales. Net profit rose to Rs.3,074 crore from Rs.2,861.28 crore a year ago. Revenue fell to Rs.19,339.37 crore from Rs.19,589.01 crore.