The Hindu Business Line : NTPC to change tack in bidding for mega projects

New Delhi, Jan.1 Having lost out in tariff-based bidding for the first set of Ultra-Mega Power Projects (UMPP), NTPC Ltd is getting its act together for future projects.

The country’s largest power generator, which was out-bid by a big margin by private competitors in the bids for the first lot of UMPPs, is considering a revamp of its approach to future bidding process, including obtaining tariff quotations from a set of empanelled equipment vendors through the process of inviting “limited tenders” prior to the bidding process for any major project to achieve competitive tariffs.

Also, the opening of future tenders for various packages (boiler, turbine, auxiliaries) of its new projects by a high-level committee to maintain secrecy of quotes is under consideration.

In the first UMPP — the 4,000-MW Sasan project in Madhya Pradesh — NTPC had placed a bid of Rs 2.12 per unit, which was well above the winning bid of Rs 1.19 per unit. After losing out, NTPC had responded by claiming that the procurement process followed by it was based on the Central Vigilance Commission’s (CVC) guidelines. This has resulted in its benchmarks becoming to known to all.

‘Disadvantage, NTPC’

What happens is that the requirement of opening of the price quoted by the various manufacturers and suppliers of the boiler/turbine generator packages for each of its projects in the presence of representatives of all the vendors brings quoted prices to go into public domain. “NTPC is put to disadvantage by disclosing the sensitive and confidential commercial information to other bidders making NTPC vulnerable to losing the bid for the project under competitive bidding route,” it said.

Besides, in order to obtain the competitive price for the power project equipment, NTPC said that it was essential to have a pre-tie up for the same with the provision that in the event of NTPC being declared the successful bidder for the project, the equipment shall be sourced from the tied-up party. However, CVC guidelines and procurement system allow purchase of equipment only through transparent, open and competitive process.

CVC suggestions

In response to issues raised by NTPC, the CVC suggested to it that it can ‘transparently’ prepare panels of various vendors and obtain tariff quotations from these empanelled vendors through the process of inviting limited tenders as and when required for competitive bidding on a case-to-case basis. The panel, CVC said, can be updated on a yearly basis. An MoU can be entered into with the lowest bidder as a token of commitment to source the supply from such vendor only in case NTPC emerges as the successful bidder.

The CVC also suggested that tenders for equipment packages for new projects can be opened confidentially by a high-level committee to maintain confidentiality of quotes. The CVC has, however, shot down NTPC’s suggestion of obtaining competitive price through negotiations with different vendors and has maintained that the lowest bid only can be obtained in a competitive bidding with all the parameters pre-disclosed.

The CVC’s suggestions are being considered by the Group of Directors constituted by the NTPC Board for increasing competitiveness.

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