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Indian Mega Power Equipment Tender Rejected By States

Aug 01, 2016

India: Although the Center Government’s procurement plan for a massive amount of electrical equipment under its two flagship schemes has been bid out, it might not work with state governments’ resistance. The resistance comes from four states — Uttar Pradesh (UP), Maharashtra, Madhya Pradesh (MP), and Chhattisgarh — among which three are Bharatiya Janata Party (BJP)-ruled.

The Union Budget for 2016-17 had allocated Rs 5,500 crore (about USD 1.18 billion) for urban power development and Rs 3,000 crore (about USD 643 million) for rural power supply. As a senior official said, there was a 20% price escalation in the central procurement over the state’s price, which could be one of the reasons why the states now suggest that they procuring the equipment themselves. Besides, the Center’s unmatched standardization process could also be the trigger.

There were 4 equipment for last month’s successful bidding -- cables, conductors, power transformers and distribution transformers. Tenders had the chance to win bidding for 40% of the total demand of the country for these equipment. However, the accurate price and quantity will never be released since the bidding is deemed to be ineffective.