India's BHEL Enters Vietnam for $50 Million Hydropower Project

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Researched by Industrial Info Resources (Sugar Land, Texas)--Indian power equipment major Bharat Heavy Electricals Limited (BOM:500103) (BHEL) (Mumbai) recently forayed into Vietnam with a $50 million contract to construct a 200-megawatt (MW) hydroelectric power plant in the country. BHEL secured the order from the state-owned Nam Chien Hydropower Joint Stock Company of Vietnam. Infrastructure major Song Da Corporation (Hanoi, Vietnam) and state-owned Petro-Vietnam (Hanoi) are major stakeholders of Nam Chien. The contract will be funded through the line of credit of $45 million extended in January this year by the Indian government to its Vietnamese counterpart. The funds will be administered by the Export Import Bank of India (Exim Bank) (Mumbai).

Under the contract, BHEL will be responsible for design, engineering, manufacture, supply, construction, installation, and commissioning of all electro-mechanical requirements of the project. Equipment to be supplied includes two Pelton hydropower generation units of 100 MW each, hydro-turbines, controls, switchgear, transformers, and monitoring and protection systems. The project is coming up at the Muong La district situated in the Son La province north of Hanoi and entails a total cost of $250 million. It is scheduled for completion by 2010.

The Exim Bank of India had earlier extended a line of credit for $27 million to Vietnam to fund Indian export contracts to the country and facilitate the supply of equipment such as textile machinery, tea processing equipment, hydropower plants, and cold rolling steel plants from India to Vietnam. Exim Bank eventually reimbursed the entire amount of the contract value to the Indian exporters upon shipment of goods. Indo-Vietnamese trade is believed to be in favour of India since India's exports to Vietnam in 2006-07 amounted to $982 million, as opposed to imports of $171 million from Vietnam during the same period. India's line of credit with Vietnam also demonstrates the former's project execution expertise in emerging markets.

Exim Bank of India is a financial institution for the public sector and is owned by the Indian Government. It was created by an act of the Parliament of India that was passed in 1981 to provide financial assistance to importers and exporters and enable coordination among traders with a view to promoting international trade. Earlier this month, the bank extended a line of credit for $10 million to the government of Gambia to finance construction of the National Assembly Building Complex in the country. The loan is expected to finance 85% of the contract value by supplying goods and services from the country. In July this year, it extended a $100 million of credit to the Sri Lankan government to finance rehabilitation activities on the Southern railway line between Colombo and Matara in Sri Lanka. At present, Exim Bank has extended a total of 99 lines of credit with credit commitments of $3.28 billion for financing exports in a risk-free non-recourse manner from India to over 91 countries in Africa, Asia, the Commonwealth of Independent States, Europe, and Latin America.

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