Windmill makers in Tamil Nadu accused of opaque pricing

June 15th, 2012 - 12:44 pm ICT by IANS  

Chennai, June 15 (IANS) The Tamil Nadu Spinning Mills Association (TASMA) has decided to approach the Competition Commission of India if windmill makers failed to provide the capital expenditure break-up of a project to the Tamil Nadu Energy Regulatory Commission (TNERC).

TASMA members, who account for around 3,500 MW of wind power installed in the state, say the windmill makers are non-transparent in their project pricing and have formed a cartel.

“We have been demanding for a detailed break-up of project capex (capital expenditure) from the windmill makers. At a recent public hearing, TNERC asked the manufacturers to submit the cost break-up. If that data is not shared, we’ll file a complaint with the competition commission,” K. Venkatachalam, the chief advisor of TASMA, told IANS.

Tariff for the wind power is fixed by TNERC based on the capex.

At a TNERC public hearing held here last week for revising tariff for wind power, officials of the Tamil Nadu Generation and Distribution Corporation (TANGEDCO) alleged the existence of a windmill manufacturers’ cartel.

They said capex for per MW could not exceed Rs.4.5 crore and the Rs.6.5-Rs.7 crore price quoted by the manufacturers was on the higher side.

“Four to five windmill makers determine the overall market and others follow. There seems to be a cartel,” a senior TANGEDCO official told IANS.

Agreeing, a senior official at an independent power producer said: “The terms and conditions offered by the windmill makers are identical.”

Refuting the charges, Ramesh Kymal, chairman, Indian Wind Turbine Manufacturers Association, told IANS: “During 1992-94, the cost per MW was around Rs.3.6 crore. Today, it costs Rs.6.5 crore.”

“If one takes into account the exchange rate, freight and land cost and taxes, the cost has actually come down. Over the years, the plant load factor (PLF) has gone up from 12 percent to 25-28 percent,” he said.

“The cost of a windmill will be between Rs.5 crore and Rs.5.5 crore. The remaining is accounted by the balance of plant (BOP),” he said.

Disagreeing with him, Sunil Jain, chief operating officer of Green Infra Ltd, another independent power producer, told IANS: “The windmill alone should not cost over Rs.4.2 crore per MW. As a turnkey solution, the cost per MW should not exceed Rs.5.5 crore.”

Venkatachalam of TASMA said there was good scope for bringing down the price.

However, he said, the market was free and competitive.

According to a senior TANGEDCO official, a reduction of Rs.1 crore per MW will result in reduction of cost by around 50 paise per unit.

“We will save around Rs.11,00,000 per MW per year. Around 900 MW of fresh windpower capacity is added annually in Tamil Nadu. The overall saving will be around Rs.100 crore per year,” he said.

The user segment is of the view that Chinese equipment, if allowed into the country, will bring down the capex which in turn would bring down the end power cost.

“Chinese equipment will be cheaper by at least 20 percent. The Indian manufacturers have to work hard to bring down their costs,” said Jain.

The TANGEDCO official said if Chinese players came in, the real cost per MW would be known.

(Venkatachari Jagannathan can be contacted at

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