Town Planning Gone Wrong - Case Study Mumbai

Tariff Based Competitive Bidding Did not improve Technology

In Indian Power Sector new trend has started by which transmission lines are awarded to private players who will build it and maintain for 25 years and they in turn shall be paid Electricity wheeling charges.
While awarding such contracts bids are invited. Quotes are taken and then reverse auction is done.

The major players who bid for such contracts are

# Sterlite
# Adani
# PGCIL
# L&T

Initially it was felt that this will revolutionize transmission sector in India.

Earlier transmission lines erected by utilities. Either they do it themselves or they award turnkey contracts. They had fixed mind about technology adopted and had CVC guidelines to follow with respect to competitive bidding and lowest bidder. In view of this same category of approved products were used widely.
For example transformers with CRGO steel were used widely instead of amorphous core which has better efficiency. The conventional ACSR, AAAC conductors were used instead of HTLS. The use of composite conductors with carbon core though with higher current carring capacity were not used. In case of Insulators conventional porcelain disc insulators were preferred due to its usage for long time.

After introduction of Composite Long Rod due to its competitive cost they were preferred.
In case of TBCB contracts bidder has choice to use technology of their choice. Since they were responsible to maintain line for 25 years it was expected that they will go for higher end products which will last long, shall not lead to line outages and line revenue shall not be affected.
However unfortunately this did not happen.

In view of pressure of being competitive in wheeling rates the bidders were forced to cut costs. The one major cost is that of material used in project. TBCB bidders held extensive discussions with their suppliers and signed pre-bid arrangement with those who quoted lowest price at bidding stage itself. The arrangement was in case if they are successful in contracts they will place orders on such suppliers on back to back basis. In view of volumes involved suppliers gave very very low prices. Non availability of another business in the market is also reason for dropping prices.

TBCB bidders opted for products which are cheap as they had no other option.

Bajaj Electricals were lowest with PGCIL as bidder on back to back basis for Ajmer-Phagi line.
They attended reverse auction with Pgcil and had to drop price by Rs 11 crores below material cost. Now their supply chain has task of procuring material within revised budget.
As per  Sterlite they have constant pressure to source competitive products.

One interesting example is of 765 kV Lakadia-Banaskantha line. While doing TBCB bidding there was tough fight between Adani and L&T Power division.
L&T were lowest in initial bid. While reverse auction Adani went on reducing price and finally L&T gave up.
After award of contract Adani floated EPC contract and again L&T projects division took order by lowering prices.
Also the Ultimate Client, TBCB bidder and executing EPC contractor shall play greater role. It is necessary that EPC contractor to propose use of PLRI and TBCB bidder should get convinced on cost benefit analysis.


DPK Udas



 

Details of TBCB contracts in 2019	Column1
CA3:C17	AWARDED TO
TBCB
765-400kv (TBCB) - TL01 - Bhuj PS-Lakadia & Bhachau-EPGL	ADANI
400kv Essar-Lakadia- Jam Khambhaliya (TBCB - TL01)	STERLITE
765kv Hexa Zebra Ajmer - Phagi (TBCB) - TL01	PGCIL / BAJAJ
765kv Hexa Zebra Bikaner (PG) - Khetri (TBCB) - TL04	ADANI/Kalpataru	1
765kv Hexa Zebra Lakadia PS - Banaskantha (TBCB) -
765kv Hexa Zebra Fatehgarh-Bhadla (TBCB) - TL01	PGCIL/TPL
765kv Hexa Zebra Bhuj PS - Lakadia (Reconfiguration) - TBCB (TL01)	PGCIL/Transrail
765-400kv Hexa & Twin AL-59 Khetri - Jhatikara & Khetri-Sikar (TBCB) TL03	PGCIL / TRANSRAIL
765kv Hexa Zebra Lakadia - Vadodara (TL01 & 02) - TBCB	STERLITE
PGCIL DIRECT
765kv  Ajmer - Bikaner (TW01)	UNITECH
765kv Hexa Zebra Ajmer - Bikaner (TW02)	KPTL
765-400kv Hexa & Twin HTLS Fatehgarh-Bhadla (TW03)	TATA
400kv Quad Mangalore (Udupi) -Kasargode (TL01) - TBCB	STERLITE
765-400kv Quad & Twin (Bersimis-Moose) Rampur-Sambhal & Meerut-Simbhavali

 


D.P.K.Udas

 

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