BHEL Secures $445 Million Tishreen Power Plant Expansion Contract in Syria

---

Researched by Industrial Info Resources (Sugar Land, Texas)--Bharat Heavy Electricals Limited (BSE:500103) (BHEL) (New Delhi), India's leading power engineering and equipment manufacturer, has signed an agreement with Syria's Public Establishment for Electricity Generation and Transmission (Damascus, Syria) to undertake augmentation of the Tishreen power plant. The contract, valued at $445 million, will add two gas turbine units of 220 megawatts (MW) each. The expansion project is expected to be completed in 33 months.

The contract for expansion of the Tishreen power project was awarded to BHEL last year and approved by the Syrian government in July this year. The scope of the contract includes design, engineering, supply, delivery, installation and commissioning of the project. BHEL will commission balance of plant, associated equipment and infrastructure, and will undertake electrical and civil activities. Installation of control systems and instrumentation also will be part of the agreement. Projects officials have indicated that there are plans to augment the generating capacity of the Tishreen power plant project to 1,450 MW by 2013. BHEL's contract is a part of this program. According to media reports, the 450-MW first phase extension contract of this power plant has been awarded to Mapna Group (Tehran, Iran).

The Tishreen expansion project will be partly funded by financing credit from the Indian government. Earlier, the Export Import Bank of India (EXIM Bank) (Mumbai) had offered financing credit of $240 million to Syria in three tranches to fund projects in the energy sector. This month, EXIM Bank extended a $100 million line of credit to Syria's State Planning Commission for the Tishreen power plant augmentation program. EXIM Bank will fully reimburse the contract value of the Tishreen project to BHEL. The Tishreen project is BHEL's first equipment contract in the Syrian market.

As part of its Strategic Plan 2012, BHEL has identified overseas markets as one of the key growth areas. The company recently secured a gas turbines contract worth $44 million from Petroleum Development Oman (PDO) (Muscat, Oman). The contract includes design, supply and commissioning of gas turbines for the Qarn Alam power plant, about 400 kilometers from Muscat. The turbines will be manufactured at BHEL's facility in Hyderabad, while the controls systems equipment will be procured from BHEL's electronics division in Bangalore.

Syria's energy sector is dominated by oil- and natural-gas-fired power plants. According to the Oil and Gas Journal (Tulsa, Oklahoma), the country has about 2.5 billion barrels of proven oil reserves and 42.1 billion cubic meters of gas deposits. Syria is also linked to the Arab Gas pipeline. This pipeline network connects Syria with Lebanon, Egypt and Jordan. Turkey is also expected to be part of this network by 2010.

In a related development, Egypt's General Petroleum Corporation (EGPC) (Cairo, Egypt), Egypt Natural Gas Holding Company (EGAS) (Cairo), and Syria's General Electricity Corporation (Damascus, Syria) signed an agreement for gas transmission and swap, which will allow gas to be delivered to Lebanon through the Arab Gas pipeline. As per the agreement, 600 million cubic meters of gas from Egypt will be delivered to Syria. Syria will use this gas to meet its domestic needs and deliver the same quantity of Syrian gas from its eastern and central regions to Lebanon. The 15-year agreement is expected to secure gas supplies for Lebanon's Deir Amman power plant. Sources indicate that this agreement is in addition to Syria's ongoing contract to receive 2.5 million cubic meters of gas from Egypt.

Syria has been focusing on strengthening its power generating capacity to meet growing energy demand. The country has a total installed electricity generating capacity of 6,200 MW. Thermal power plants account for 85 to 90% of the generating capacity. According to Ahmad Kussay Kayyali, Minister for Electricity, Syria's estimated power deficit is about 600 to 800 MW. Kayyali indicated that about 1,000 MW of new power generating capacity was under construction. Of this, about 250 MW is expected to be commissioned in the next two months, while about 250 MW is expected to be added by February to March 2010.

The Syrian energy sector will witness development of five more projects, which will include one new power plant at Deir-Ez-Zor and expansion projects at Deir Ali, Jandar, Tishreen, and Al-Zara. By 2012, these five projects are expected to increase the power generating capacity of the country by 3,000 MW.

Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy related markets. For more than 26 years, Industrial Info has provided plant and project opportunity databases, market forecasts, high resolution maps, and daily industry news.