The implications of the Central government’s decision not to import power plant equipment from China, amid the border stand-off, are not yet clear for the ancillaries of the public sector major, BHEL, that power the local economy in no small measure in the region.
As many as 450 ancillary units in Tiruchi, Thanjavur and Pudukottai districts employ close to 40,000 workers.
But the capacity-utilisation of most of the steel fabrication units has dropped drastically due to dwindling orders from BHEL.
Though the Centre has also advised the State governments to make sure that the power distribution companies do not place orders for Chinese equipment, the ancillaries are in a ‘wait and watch’ mode.
Most of the ancillaries that have been pushed into a situation of less than 25 capacity utilisation due to the decline in the order book position of BHEL in recent years, in a large measure due to increasing competition from Chinese companies, are not certain if the emerging situation will turn advantageous for BHEL.
Citing the National Electricity Plan 2018, which estimates that the share of electricity generated from coal-based power plants would come down to 58% by 2027, vendors said India’s shift from thermal power to renewable energy does not augur well for BHEL’s recovery in the long-term.
In fact, public sector enterprises,including BHEL, started losing their competitive edge a decade back when the power utilities started ignoring the purchase preference policy after it was scrapped by the Central gvernment.
Gone are the days when BHEL used to wrest large orders owing to the 10% price preference from the lowest quoted bid for any government contract. But then, the government’s “Make in India’ slogan would make real sense only if the Central Public Sector Enterprises are patronised in some way or the other, according to BHEL Small Industries Association and the Tiruchi District Tiny and Small Scale Industries’ Association that have ancillaries of BHEL as the member units.
