The Hindu Business Line : BHEL feels hamstrung by tender conditionalities

KING Drupad wanted the suitor for his daughter, Draupathi, to be selected through an open competition, but he also badly wanted Arjuna to be his son-in-law.

So he designed a test that called for skills he knew only Arjuna possessed: Shoot an arrow into the eye of a dead fish that is kept swirling overhead, looking at its reflection in a pan of water below. Arjuna won the `competition'.

There is no record in the Mahabharatha of the reactions of those who lost the bid for Draupathi, but it does not take much imagination to believe they were not slightly peeved. Still, if one wants help in empathising with them, one may study the case of BHEL.

BHEL feels edged out of competition by tender clauses that make it ineligible to participate unless it has a foreign collaborator. If it gets a collaborator, the costs of collaboration makes it uncompetitive.

Take the case of the tender of Neyveli Lignite Corporation, which intends to put up two 250 MW using boilers of `circulating fluidised bed combustion' type. This special type of boilers said to be better suited for NLC's marcacite-containing lignite. One of the eligibility criteria of the tender is that the manufacturer should have already produced and sold CFBC boiler of similar size. BHEL has sold a few CFBCs of 125 MW, but not 250 MW. It feels that experience of having manufactured 125 MW units, which are operating well today, is enough for producing 250 MW units too.

However, to make itself eligible for the race, BHEL tied-up with Lurgi of Germany, but fears that the cost of collaboration, which could be in terms of sourcing a part of the equipment from Lurgi, could push it out of competition. It fears that Alstom, which has a boiler plant in the low-cost-steel land of China, could walk away with the NLC order.

NLC's is not the first case. Last year, BHEL lost the contract for supplying three supercritical boilers of 660 MW each to NTPC's Sipat project, to a Korean company called Doosan. `Supercriticals' are more energy efficient boilers, in which the temperature and pressure build-up is higher than conventional boilers. This poses technological challenges, such as how to prevent the steels walls of the boilers from melting.

To learn this technology, BHEL a few years ago tied-up with Deutsche Babcock, which later became Babcock Borsig that also turned bankrupt. But BHEL says it was able to learn the technology when the collaboration was alive.

But since NTPC had only BHEL's word for it, NPTC insisted on prior experience, but said an Indian supplier (BHEL) could participate in the tender along with an overseas collaborator. Then came the catch: the overseas collaborator should give a bank guarantee for an amount calculated as per a certain formula. BHEL tied-up with Alstom, and the bank guarantee worked out to $100 million. Alstom, on its part, wanted BHEL to source parts of equipment from it, which according to BHEL, made its bid costlier.

BHEL officials claim that their company has the best experience in handling India's high-ash coals.

In contrast, Doosan admits it has no experience with high-ash coals.

In an interview to the Power Engineering International magazine, Doosan's project manager, Mr Ho Jun Hyun, says: "Although Doosan has 20 supercritical units in operation, we have not had much experience with high ash coals. We are, therefore, carrying out simulation modelling in the US to measure gas flows and particle distributions etc. Boiler designs will be adjusted according to the results. We expect to finish simulations this year."

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