Challenges in Procuring Quality Equipment for Power Sector and suggestions for systemic changes
Author: V K Agarwal, Member – IEEMA, Past FISME President
In a seminar organized by IEEMA recently Power Minister R.K. Singh asked Power Distribution companies (DISCOMS) to to open LCs on purchase of power from the Central utilities.
Let’s hope of a day when DISCOMs will have to follow financial discipline and their management including MDs will be subject to all rules under Companies Act and other Commercial laws.
What people were also keen to hear at the webinar were his views on Equipment ‘Quality’ in T&D segment especially at the State level - the need & ways to upgrade, both at policy and at operating level. Sadly, the issue hasn’t caught the attention it deserves though.
Quality in public procurement has a very strong ripple effect on bulk of manufacturing activity, be it in Quality, Innovation and Competitiveness, all hallmarks of a forward looking economy. Ensuring Quality in T&D you can be a harbinger to a wholesome and a welcome change on a much wider canvas.
PSU buyers are indeed constrained by the L-1 syndrome, wading through the process. This challenge cannot possibly be overcome without a strong political initiative.
Some of the points that need to be underscored in this connection are:
--- 1. Quality can become an essential element in public procurement only if it is valued in monetary terms.
--- 2. Only good vendors can supply good quality on a consistent basis.
--- 3. Goods supplied at unworkable rates cannot be of good quality and hence such offers may be rejected
--- 4. Right manpower, systems and passion to excel are at the root of producing quality.
--- 5. With little insistence of PSU buyers on quality – manufacturers now acquiesce to produce low quality.
--- 6. Life time cost is more important than initial cost.
--- 7. Adoption of IT&C for asset management and performance evaluation of major equipment of network need to be a precondition for grant of central assistance.
The suggested initiatives are already in use Work in Tata Power utilities. Differentiating vendors can be a strong motivator for turning out good quality. Vendor rating can be awarded after a firm undergoes a comprehensive audit on several counts.
The “assigned vendor rating” can be dovetailed with quoted prices in bid evaluation to rank the bidders for award of business. This is giving value to quality in real time..
Common website of utilities can function in real time and list names of recalcitrant vendors with details of malfeasance; reciprocal basis allow the vendor to refute allegation and put the wrong doer in the docks.
Replace the black and white concept of PASS-FAIL of materials during acceptance tests, with a system to differentiate intentional mischief from bona fide errors