NTPC is yet to award a power generation equipment order valued at around Rs1,270 crore to Alstom JV
Concerned over the US justice department’s bribery investigation of France’s Alstom SA, India has raised the issue with the chief executive of Levallois-Perret headquartered firm.
State-owned NTPC Ltd is yet to award a power generation equipment order valued at around Rs.1,270 crore to a joint venture of the French firm, whose energy business is being eyed by General Electric Co. and Siemens AG. General Electric has made a €12.4 billion offer for Alstom’s energy business.
Arup Roy Choudhury, chairman and managing director of NTPC took up the matter with Alstom’s chairman and chief operating officer (CEO), Patrick Kron, on his visit to India in April.
This comes at a time when India’s largest power generation utility is worried over the raft of corruption scams that have hit the Congress-led United Progressive Alliance (UPA) government.
“There have been some concerns,” an NTPC executive said, speaking on condition of anonymity. “We have taken it up at the appropriate level.”
The turbine and generator order for the additional 1,320 MW at 440 MW Tanda project in Uttar Pradesh is to be awarded to the venture of Alstom and Bharat Forge Ltd.
“We are seized of the issue,” said a second NTPC executive who didn’t wished to be identified.
These orders are part of the bulk orders floated by NTPC where bidders were short-listed but contracts couldn’t be awarded due to lawsuits, land acquisition issues and the lack of coal linkages to fuel its projects. These bulk tenders were for nine units of 800MW each and for the supply of 11 boilers and 11 turbines of 660MW each.
“Alstom has briefed (us) about their compliance policy, certification from ETHIC Intelligence for its anti-corruption compliance programme and third party external audits conducted by Geneva-based SGS Audit,” a third NTPC executive said, asking not to be named. “They have assured us that Alstom is following fair business practices and shall be deputing a compliance officer for briefing further developments on the ongoing probe.”
ETHIC is a certification agency specializing in anti-corruption compliance programmes and SGS Audit is an audit services provider.
“The information is partially correct to the extent that Patrick Kron, chairman and CEO of Alstom, met NTPC top management as a general courtesy call. The meeting was taken on Alstom initiative as Patrick Kron was in Delhi for a day’s visit,” an Alstom India spokesperson said in an emailed response. “Alstom Bharat Forge JV has submitted a competitive bid for the 2x660MW Tanda TG package. As per NTPC Tanda tender requirements, said JV has also submitted an integrity pact. Having made a competitive offering, Alstom Bharat Forge JV expects a positive decision from NTPC.”
In response to an email query on 1 May to Bharat Forge, a company spokesperson said in a text message that he was on vacation.
Alstom has an earlier association with NTPC. It emerged s the lowest evaluated bidder for a steam turbine generator package in a 660 MW bulk tender and were awarded the Nabinagar (3 units), Solapur (2 units) projects valued at around Rs.3,819 crore.
“The award of contracts to Alstom for Nabinagar and Solapur were placed in 2012-13, while the reports regarding alleged bribery probe of energy projects by US justice department is a recent development that came to light. However, upon learning this news, NTPC’s chairman took up the matter with visiting chairman and CEO, Alstom Global, Patrick Kron on 2 April,” said the third NTPC executive.
India is important in Alstom’s scheme of things. The country has accounted for about 10% of the French company’s orders in the past seven years. Alstom employs around 8,000 people in the country—the largest outside France. The company is also in the running for the project to set up railway locomotive factories at Madhepura and Marhowrah in Bihar.
“It is gathered from news reports that General Electric Co. made an offer for acquiring Alstom energy business and Siemens is also planning a possible counterbid to GE offer. In the absence of exact terms of acquisition, NTPC is currently not in a position to assess any potential impact on its contracts placed with Alstom. However, as per the agreement signed by Alstom, it is legally bound to honour and fulfil their obligations under the contract,” said the third NTPC executive.
NTPC has the capacity to generate 43,039 megawatts (MW) of electricity with 16 coal-fuelled projects.