Alstom Likely to be Technological Partner in BHEL-NPCIL Joint Venture in India's Nuclear Power Sector

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Researched by Industrial Info Resources (Sugar Land, Texas)--Alstom SA (EPA:ALO) (Levallois-Perret, France) almost certainly will be selected as the technological partner for the joint venture formed by Bharat Heavy Electricals Limited (BSE:500103) (BHEL) (New Delhi) and Nuclear Power Corporation of India Limited (NPCIL) (Mumbai).

The official announcement naming Alstom as the technological partner is expected to be made in the coming weeks. Some reports have indicated that Alstom may be offered up to 30% equity in the venture, although none of the parties has confirmed this.

In May 2008, BHEL and NPCIL signed an agreement to form a joint venture aimed at undertaking nuclear projects, specifically to provide engineering, procurement and construction services for the nuclear power sector in India and the rest of the world. BHEL has competence in engineering, manufacturing, erection and commissioning activities within the power industry, while NPCIL has expertise in the management and execution of large nuclear power projects. For related news item, see July 16, 2009, article - India's BHEL and NPCIL Close to Finalizing Technology Partner for Nuclear Venture. In July the same year, encouraged by parliamentary approval for an India-U.S. nuclear agreement, the two companies announced their decision to invite expressions of interest in a bid to find a technology partner to manufacture turbines with capacities of 700 megawatts (MW), 1,000 MW, and 1,600 MW for nuclear power plants.

Discussions were held with Alstom, Siemens AG (NYSE:SI) (Munich, Germany) and General Electric Company (NYSE:GE) (Fairfield, Connecticut).

Under the Indian Atomic Energy Act, technology suppliers such as Alstom are entitled to participate in the country's nuclear power sector only through joint ventures with state-owned companies such as NPCIL and BHEL. In its role as a technology partner, Alstom will provide complete technology for the design, manufacture and commissioning of turbine/generator sets of various capacities. In addition, the company will be required to design an operable maintenance program for the power plants.

Currently, nuclear power accounts for only 4.2% of the total electricity generated in India, but the government plans to increase this to 9% within 25 years. In 2008, the country had 17 nuclear power stations in operation, generating more than 4,000 MW. This is likely to increase to 6,000 MW in 2010, as new plants come on line.

Alstom is a world leader in the power and transportation industries, particularly in hydroelectric power generation and conventional islands, or turbine islands, for nuclear power plants. Alstom has supplied almost 180 units worldwide. More than 30% of the nuclear power plants operating in the world today use equipment manufactured by Alstom.

With long-term agreements in place with nuclear power plant operators in several countries, including South Korea, the United Kingdom, Canada, South Africa and China, Alstom is well placed to take advantage of the current revival in nuclear power.

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