KPCL defers awarding turnkey project to Chinese company

The KPCL had decided to award the Engineering Procurement and Construction (EPC) contract for Munirabad and Ghataprabha hydro-electric projects to a Chinese
company, Hunan Allonward Hydropower, and Saravana Industries.

The tender, estimated to be worth nearly Rs 140 crore, includes the supply of two 10MW turbines for Ghataprabha and one 10MW unit for Munirabad, apart from civil construction work.

The decision to award the tender to the Chinese company has created ripples among local manufacturers and developers who had approached Chief Minister B S Yeddyurappa seeking scrapping of the deal.

According to a letter given by the Indian Hydro Turbine Manufacturers Association, the Chinese company has doubtful credentials and has no established track record in India.

Stating that Chinese machineries are of substandard quality and offer less guarantee than those offered by Indian companies, the Association has accused the KPCL of violating the anti-dumping laws by choosing the China firm. The Association has also questioned the credibility of the little known company, Saravana Industries, chosen for civil construction.

The contract has raised eyebrows right from the beginning. Sources in the KPCL say that global tenders are necessary for smaller projects as equipment are not available in the market and are often custom-made. Sources of companies involved in hydel power projects in the State say even pre-qualification bids were given to suit the Chinese company and it was a foregone conclusion to hand it over to them even before the tender was floated.

The sources claimed that the technical bid for the tender was put on hold during the tenure of S M Jaamdar as MD of the KPCL, and picked up steam only after he was transferred.

The State government had hitherto never purchased any equipment from Chinese manufacturers except for a few cables for the Varahi Hydro Electric project. While there was no complaint about the quality of the cables, the delays were enormous, coupled with language problems, and the KPCL was at the mercy of the Chinese company for spare parts.

The Central Electricity Authority, responding to complaints and queries from Indian companies, prepared a report in 2008 about boilers and auxiliaries being sourced from Chinese manufacturers and made recommendations to industries, while buying their machines.

This present tender has drawn a lot of criticism as the calling for a global tender itself has raised eyebrows. But KPCL MD Yogendra Tripathi defended it saying that three Indian companies had shown interest, but two of them did not take part in the tender bid. “The third company said that they are not manufacturing equipment matching that specification,” he clarified.

Denying that there was a problem with the tender process or the Chinese company, Tripathi said the matter had been deferred as questions about the competence of the firm had been raised.

“We are deferring it, so we can verify it again and complete the process of due diligence,” he added.

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