Though the heavy industries ministry is trying to support the state-owned firm, the power ministry and the Planning Commission are gunning for BHEL. CNBC-TV18 reports on why the power major evokes such acrimony.

With capacity short of target by 12,000 megawatts during this plan ending next year, the power ministry and the Planning Commission are concerned that the power sector is dragging down economic growth. Also, during the next 5-year plan, another 70,000 megawatts capacity has to be added.

But neither the Planning commission nor the power ministry are confident of depending solely on BHEL to supply the equipment. Montek Singh Ahluwalia, deputy chairman, Planning Commission, says, "If we are to achieve capacity addition, it has to be much larger than BHEL - three times BHEL. If 65,000 mw has to be added in next five years, private guys should be encouraged."

RV Shahi, secretary, ministry of power, says, "We need more than 1 BHEL unit… at least three or four. The issue is being considered by heavy industries."

BHEL had come to acquire a grip on power projects, albeit at the cost of private suppliers, due to a preference policy that required the government to place contracts with the company if its price was up to 10 per cent higher than the lowest quote.

Last year, that policy was extended for all central government enterprises till March 2008, but BHEL was excluded. Instead, the power ministry was required to place a certain number of orders with BHEL at a negotiated price benchmarked to other competitively bids.

The heavy industries ministry however says that BHEL has not been given any contracts under the deal. The power ministry and the Planning Commission do not seem to be keen.