BHEL asked to form empowered committee

The Group of Ministers (GoM) on Infrastructure headed by Union Finance Minister P. Chidambaram has asked Bharat Heavy Electricals Limited (BHEL) to constitute an empowered committee that would look into international practises on capacity booking and recommend the best possible practise to be adopted.

The GoM had recently examined the ability of BHEL to supply plant equipment for creation of generation capacity of 78, 0000 MW during the XI Plan. It also looked into the issue of incorporation of the price escalation clause in all contracts and capacity booking for importing critical imported equipment in view of the long lead times involved in supply of the same.

The GoM has desired that the empowered committee would suggest procedural and other changes required to adopt the advance booking system. These will be approved by the board of BHEL in due course. The empowered committee will also take decisions on capacity building in accordance with the above approved policy. BHEL will also examine the possibility of diverting material to other users to avoid cancellation charges, if any such eventuality arises. The GoM was of the view that these business decisions were necessary for BHEL to compete with other entities in this business.

On the issue of price escalation, it was decided that BHEL will, in all future contracts, incorporate a price variation clause as has been done by NTPC, which has already been accepted by the vendors. To enable efficient execution of power projects, it was necessary for BHEL and sub contractors to be suitably compensated for abnormal price increase. In each case, a committee of 4 to 5 persons including technical and financial heads of the project will make recommendations on price increase due to abnormal increase in price of raw material, components or other factors.


Source: http://www.hindu.com/2008/08/22/stories/2008082255591600.htm