Manufacturing Capacity & Construction Agencies for Sub Group 7 of the Working Group on Power for formulation of XII

1. Manufacturing Capacity & Construction Agencies for Sub Group 7 of the Working Group on Power for formulation of XII 5 Year Plan 6th July 2011

2. Sub Group 7 of the Working Group on Power for XII Plan • Major Key Inputs identified by the Sub-Group 7 in • it’s 1st Meeting held on 03/06/11 • Fuel • Land and water • Transport • Ports • Manufacturing Capacity and Construction Agencies • Material

3. Terms of Reference of the Team to work on the Issue of Manufacturing Capacity & Construction Agencies • Indegenious manufacturing capability vis-s-vis requirement - BTG and BOPs • Need for additional manufacturing capacity for Main Plant / BOPs. • Construction / Erection agencies and steps to create additional agencies. • Availability of construction equipment / machinery. 

4. Manufacturing Capacity – Main Equipment

5. Recommendations of the Working Group on Power for XI Plan and Action Taken “There is a need to develop additional players in the domestic area to adequately meet the projected capacity addition demands and in order to discover the benchmark price.” Based on the above recommendations and Initiatives of the Government, number of new manufacturers have come forward and have set up/ are setting up domestic manufacturing facilities for Boiler and TG. Large number of domestic manufacturers participated in the Bulk tender floated by NTPC. 5

6. Domestic Capacity for Boiler and Turbine Generators Large Coal based Thermal Sets • Team took –up the assessment of the Capacities likely to come up. Compilation of data taken up through: • Inputs from the manufacturers who are the members of the Team viz., BHEL, Alstom-Bharat Forge, L&T-MHI and Toshiba-JSW, for their respective capacities • Information to be obtained by CEA for the Capacities of other manufacturers. • Details received from the member manufacturers; awaited for • other manufacturers 6

7. Domestic Capacity Planned – Thermal Sets (TG) All figs in MW 7

8. Domestic Capacity Planned – Thermal Sets (SG) All figs in MW 8

9. Domestic Capacity Planned – Thermal Sets (Boiler & TG) • It is seen that following domestic capacities shall be available p.a.: • By 2013-14By 2014-15 • TG (MW) 30,020 35,020 • SG (MW) 26,500 40,500 • Even without considering the Capacities of the manufacturers who are not the members of the team and whose confirmations are awaited, Capacity of 27,020 MW and 23,500 MW would be available from 2012-13 for TG and SG Packages respectively from domestic facilities. • Above Capacities are much higher than the Projected Capacity addition program of XII Plan which are: • CEA’s Projections of 75,000 MW(Which includes Hydro, Gas Nuclear Projects as well as Orders on foreign manufacturers) • Team’s assessment of 125,000 MWconsidering Orders already finalised + Likely Orders during next 1-2 years, which includes Order of 31,000 MW already placed on foreign sources. 9

10. Domestic Capacity – Boiler and TG: Concerns • Under-utilisation of the capacities due to • Large number of Orders going to foreign suppliers in the absence of Level Playing Ground – Committee of Secretaries acknowledged disadvantage, conservatively estimated as 14%, faced by domestic Industry and recommended implementation of Tariff Measures - Awaited • Lowering of the Projections – Earlier projections of 1,00,000 MW for XII Plan revised to 75,000 MW – Main Equipment for ~95,000 MW already ordered and further orders (including NTPC’s Bulk Orders) during next 1½ - 2 years also shall be targeted for XII Plan. • Lower projections likely to affect otherwise feasible projects as Key-input providers may not invest in the Sector • Team is of the view that considering the existing deficit and projected GDP growth, demand shall be much higher • Implementation of Performance norms – Performance norms announced by CEA – targeted at setting up of Projects with efficient and environmental friendly technology. Also expected to result in competition among technically comparable equipment. Implementation mechanism for the Performance Standards required to be put in place 10

11. Domestic Capacity – Boiler and TG: Concerns • Advisory issued by CEA to State/ Central Utilities to specify the condition of Phased Manufacturing Program (PMP) in the tender specifications of Super-critical equipment - not being followed in most cases 11

12. Domestic Capacity – Boiler and TG: Concerns • Other Issues (being deliberated by other teams): • Delay in Environment Clearances • Fuel Availability, Land • Infrastructure (Road, Port facilities etc.) • Non availability of raw materials like CRGO, Casting Forgings etc indigenously • Power Evacuation 12

13. Domestic Capacity for Main Equipment Hydro Sets BHEL has a Manufacturing Capacity of 2,500 MW p.a. In addition, domestic capacity is also available with other domestic suppliers like Alstom and Andritz. These Capacities are adequate to meet the Projected Demand of 9-10,000 MW during XII Plan and 12,000 MW in XIII Plan. Gas Turbines No demand projected. BHEL has capacity to manufacture 1955 MW GTs p.a. including 4 sets of advance class GTs of ~250 MW rating – No constraint of capacity apprehended even if some Gas projects come up. Nuclear - Turbines and Steam Generators Steam Generators and Steam Turbines for XII Plan 700 MW projects already under execution. Tie-ups for higher capacity (1000 MW and higher) being pursued by various manufacturers – foreign suppliers looking for local tie-ups for manufacturing. 13

14. Domestic Capacity – Balance of Plants (BoP) • BoPs deliberated by the Team • Coal handling System • Ash Handling System • Chimney • Cooling Towers • DM Plant • PT Plant • Fuel Oil System 14

15. Domestic Capacity – Balance of Plants (BoP) • Findings of the Team • Many Projects of XI Plan suffered due to non-availability of BoPs on time – those ordered by Developers directly as well as the ones ordered by EPC Contractors • Number of Vendors now available (CHP: 17; AHP: 14; Cooling Tower: 12) • Vendors catering to other Sectors also • No authentic data on their capacities available • No reliable mechanism to assess the capacities – Vendors claim adequate capacities, yet unable to deliver on time – Need to assess the capabilities before placing orders • More delays in Execution than supplies 15

16. Domestic Capacity – Balance of Plants (BoP) • Findings of the Team … contd. • CEA issued guidelines for qualification of JV companies to participate in various tenders for BoP – Many Utilities not following the guidelines • NBPPL, a Joint Venture of NTPC – BHEL formed to supply and execute various BoPs including CHPs and AHPs – facing problem of qualification due to non-adherence of the CEA’s guidelines by Utilities • L&T has informed it’s capability to execute BoP work for Power Plants equivalent to 10,000 MW • Conservative demand projections holding back vendors from increasing capacities for Power Sector CEA has taken up with the BoP vendors to providing details of their Capacities and Loads as well as their constraints in meeting the project schedules 16

17. Domestic Capacity – Other Equipment • Constrains in following areas expressed by some team members • Power Cycle Piping – L&T and BHEL have adequate in-house capacities, matching the SG and TG Capacities. Other manufacturers of SG & TG apprehend non-availability of domestic supplies • Power Transformers – Short Circuit Testing Facility in the Country (Being set-up; exptd. by 2014) • Except for above, Capacity/ capability not a constraint for any other item 17

18. Construction Agencies • Limited qualified erection contractors • Construction agencies concurrently working on different sites – frequent redeployment of resources • Inadequate T&P • Lack of Skilled manpower, particularly for High Pressure welders • Conventional erection techniques only followed • Withdrawal of Machinery and Manpower in case of any interruption in work 18

19. Construction Equipment • Sub-Contractors have limitation of providing high capacity Tools & Plants, necessary for faster execution of erection • Main Contractors like BHEL and L&T have built up inventory of such T&P, which are given to sub-contractor to carry out erection • Delay in release of T&P from one project site often delays deployment at next Site • Suppliers of T&P for hiring needs to be developed 19

20. Suggestions • Maintain a strong domestic manufacturing base by • Implementation of Tariff measures at the earliest • Introduction of a mechanism for implementation of Performance Standards already notified • Advisory for specifying PMP condition in Bidding documents for Super-critical sets be made a mandatory requirement • Standardisatiion of Unit Ratings – 660 and 800 MW for large Super-critical Thermal Sets • While finalising the demand projections, implication of under projection on setting up of new capacities by the key input providers be also considered • Assessment of capacities and loading of BoP Vendors by centralised agency (CEA) • Qualification criteria notified by CEA be followed by all developers • Assessment of Project Management and Engineering capabilities of BoP vendors before placement of order 20

21. Suggestions • Orders may be placed on single responsibility basis on EPC basis for better accountability. • In non EPC jobs, instead of multi packages for BoPs, Single BoP Package or at the most divided into 3 Packages only viz Mechanical BoPs, Electrical BoPs and Civil may be followed • Training of Skilled/ Semi-skilled workers for Power project requirements to be taken by EPC Contractors, Developers as well as the Manufacturers • Centralised agency like CEA to formulate qualification requirement for construction agencies 21

22. THANK YOU

23. Sub Group 7 of the Working Group on Power for XII Plan Sub Group 7 is responsible to identify the Issues Concerning Key Inputs for formulating the 12th Plan on Power

24. Sub Group 7 of the Working Group on Power for XII Plan • Major Key Inputs identified by the Sub-Group 7 in • it’s 1st Meeting held on 03/06/11 • Fuel • Land and water • Transport • Ports • Manufacturing Capacity and Construction Agencies • Material

25. Sub Group 7 of the Working Group on Power for XII Plan • Issues related to Manufacturing Capacity and Construction Agencies discussed in the I meeting of group 7 • BHEL capacity would be 35,000 MW by 2012-13 whereas demand is around 15 to16000 MW. • There is sufficient capacity for BTG, however BOP and Civil contractor constraints continue to exist • NTPC has formed separate JVs with Bharat Forge and BHEL • Skilled labour at site is a major problem • Broad basing of BOP contractors as few corner majority of the contracts

26. Sub Group 7 of the Working Group on Power for XII Plan Issues related to Manufacturing Capacity and Construction Agencies discussed in the I meeting of group 7 BHEL capacity would be 35,000 MW by 2012-13 whereas demand is around 15 to16000 MW. There is sufficient capacity for BTG, however BOP and Civil contractor constraints continue to exist NTPC has formed separate JVs with Bharat Forge and BHEL Skilled labour at site is a major problem Broad basing of BOP contractors as few corner majority of the contracts Civil contractors using primitive technology and need to improve and adopt better erection techniques. CEA may come out with best erection practices Standardised unit/ equipment size/ design. Reasonable and rational criteria while defining QR for BoPs. Need for more engineering consultants to avoid delay in the approval of drawings