CEA’s move to make domestic sourcing mandatory for power equipment mfgs would help MSMEs, says Expert

New Delhi, May 30 (KNN) The Central Electricity Authority (CEA) has made the domestic sourcing of equipment mandatory for all central as well as state-funded projects for the domestic power equipment manufacturers.

Domestic manufacturers have invested heavily in technology transfer from their principals or have developed technology indigenously, for creating/ expanding manufacturing capacities, manpower and skill development to meet the growing demand.

“Underutilization of existing manufacturing facility has become a matter of concern because of large scale penetration of foreign equipment/ material in power sector. Therefore, in domestically funded projects of Ministry of Power or CPSUs or projects funded by Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) or by state power utilities, the procurement of equipment/ material should be made from domestic/ local manufacturers through Local Competitive Bidding only,” CEA said in a letter to the power equipment manufacturers.

But in case an international tendering process has to be followed, the price has to be quoted in rupee by all contenders. This will provide a level field to domestic players, the CEA instructed all stakeholders in a letter dated May 19.

Reacting to this, Debashis Bandhopadhyay, Director-Policy, FISME, said, “While the initiative will be a welcome move for the MSME sector, Government  should direct compulsory procurement of 20% of the total procurement for these projects from micro and small enterprises.”

He further said, “The public procurement policy stipulates 20% of all procurements by central Government and central public sector undertakings from MSEs compulsorily w.e.f. 1st April 2015, but the actual procurement is much less.

If procurement from MSEs is reiterated in the CEA directive, it will strengthen implementation of the procurement policy. Also compulsory procurement from MSEs in each public power project will ensure procurement of high value items from MSEs. Just like Government is supporting domestic manufacturers from unequal competition from large global firms, it should also ask the PSU to build capacities of MSEs,” he added.

CEA, in the letter, also asked the PFC and REC to ensure that utilities follow a transparent two-part bidding/ e-tendering in procurement process for Central Funded schemes such as RGGVY, DDUGJY, R-APDRP, IPDS for which they are nodal agencies and also for projects funded by PFC/ REC. (KNN Bureau)