More worries on BHEL's order inflows

The stock of BHEL fell two per cent on Monday, after the Rajasthan Electricity Board scrapped a tender for supply of equipment and commission of plant. While the news may have little bearing on the company financially, this incident reinforces a larger risk of delays/cancellation of orders by beleaguered State Electricity Boards (SEB). State-run electricity board Rajasthan Rajya Vidyut Utpadan Nigam scrapped tenders worth Rs 12,000 crore for two projects of 660 MW each. BHEL was the lowest bidder in the project and BGR Energy Systems, reportedly, the second lowest. LOWEST BID While other SEB orders were delayed on these counts, the said project had received environmental clearance as well as fuel linkages. The scrapping of tender therefore, comes as a surprise. Guidelines issued by the regulatory authorise prevent the order from being awarded to the second lowest bidder. Hence, if a SEB does not wish to award the order to the lowest bidder, it may resort to scrapping the tender and starting afresh. But pricing does not appear to be the issue here. According to BHEL officials, the company's bid was 12 per cent lower than the second lowest bid. FINANCIAL DISTRESS This leads to the other possibility of the Rajasthan SEB suffering from financial crunch. Rajasthan, Tamil Nadu and Uttar Pradesh are known to be among the top loss-making electricity boards in the country. more at: http://www.thehindubusinessline.com/companies/article3371136.ece