NTPC may scrap its over Rs 2,000-crore contract with Russia's state-owned Technoprom Export (TPE) for supply of main power equipment for Barh Stage I project in Bihar, ending a nine-year deal that has generated a fair share of controversy and diplomatic heartburn and delayed the 1980 MW project by over a decade.
Sources in the government said the state-owned NTPC has sought the government's consent to terminate the contract so that the issue doesn't cause further embarrassment for the government and affect India's commercial and diplomatic relations with Russia. Russian conglomerate Rostec is the holding firm of TPE. “Though there is some progress in one of three 660 MW units that are part of the project, the movement is still sluggish and we are not confident whether the project could be fully commissioned by FY17. It would be better if NTPC takes an Indian equipment supplier such as BHEL to complete the project quickly,” said an NTPC official.
NTPC had earlier sought involvement of the ministry of external affairs to impress upon the Russian government to extend a line of credit (about $ 600 million) to the financially stressed TPE so that it honours its contract with NTPC. But this arrangement has not worked out so far, with almost negligible progress on the power plant for the last one year.
The NTPC Barh Stage-I project in Bihar, conceived way back in 1999, comprise three units of 660 MW each. TPE won the order worth Rs 2,066 crore to supply boilers for the project in February 2005. Work on the project was, however, stalled after a contractual dispute between the two companies. The Russian firm demanded more money for supplying the boiler citing higher steel prices. Technoprom has demanded an additional R1,700 crore which NTPC said was unacceptable to it. The power generator also later said Technoprom hid material facts about the deal with regard to involvement of an agent in the entire process, a fact that was brought to light by the CBI. There were allegations of kickbacks as well. NTPC has already paid about R900 crore to TPE that has helped it to get at least one boiler for the project. Sources said if the project is scrapped at this stage, NTPC would have to forgo its claim over this payment as this would be adjusted for completing work on one of the 660 MW units of the 1,980 MW project. The new equipment supplier could be given orders for the balance two units of the project.
“The project got fresh deadlines for completion in 2011 after the Indian government, in an attempt to prevent the issue from becoming a diplomatic row, got the two companies to end their differences and move ahead with the project. But TPE is facing a major financial crunch, leaving further delays in completing the Barh plant,” a power ministry official said.
The power producer came close to scrapping the contract even in 2010 when its board decided to terminate the contract and the power ministry seconded the decision.
Sources in the government said the state-owned NTPC has sought the government's consent to terminate the contract so that the issue doesn't cause further embarrassment for the government and affect India's commercial and diplomatic relations with Russia. Russian conglomerate Rostec is the holding firm of TPE. “Though there is some progress in one of three 660 MW units that are part of the project, the movement is still sluggish and we are not confident whether the project could be fully commissioned by FY17. It would be better if NTPC takes an Indian equipment supplier such as BHEL to complete the project quickly,” said an NTPC official.
NTPC had earlier sought involvement of the ministry of external affairs to impress upon the Russian government to extend a line of credit (about $ 600 million) to the financially stressed TPE so that it honours its contract with NTPC. But this arrangement has not worked out so far, with almost negligible progress on the power plant for the last one year.
The NTPC Barh Stage-I project in Bihar, conceived way back in 1999, comprise three units of 660 MW each. TPE won the order worth Rs 2,066 crore to supply boilers for the project in February 2005. Work on the project was, however, stalled after a contractual dispute between the two companies. The Russian firm demanded more money for supplying the boiler citing higher steel prices. Technoprom has demanded an additional R1,700 crore which NTPC said was unacceptable to it. The power generator also later said Technoprom hid material facts about the deal with regard to involvement of an agent in the entire process, a fact that was brought to light by the CBI. There were allegations of kickbacks as well. NTPC has already paid about R900 crore to TPE that has helped it to get at least one boiler for the project. Sources said if the project is scrapped at this stage, NTPC would have to forgo its claim over this payment as this would be adjusted for completing work on one of the 660 MW units of the 1,980 MW project. The new equipment supplier could be given orders for the balance two units of the project.
“The project got fresh deadlines for completion in 2011 after the Indian government, in an attempt to prevent the issue from becoming a diplomatic row, got the two companies to end their differences and move ahead with the project. But TPE is facing a major financial crunch, leaving further delays in completing the Barh plant,” a power ministry official said.
The power producer came close to scrapping the contract even in 2010 when its board decided to terminate the contract and the power ministry seconded the decision.
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