BGR Energy Secures India's $1.2 Billion Contract for 600-Megawatt Thermal Power Project in Rajasthan

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Researched by Industrial Info Resources (Sugar Land, Texas)--The Power Projects division of BGR Energy Systems Limited (BOM:532930) (Chennai, Tamil Nadu) has secured a $1.2 billion engineering, procurement and construction (EPC) contract from Rajasthan Vidyut Utpadan Nigam Limited for the 1,200-megawatt (MW) Kalisindh thermal power project in Jhalawar, Rajasthan. BGR will be responsible for supply of plant equipment, Balance of Plant (BoP) and control systems. The company will also undertake architectural, civil and structural works for the project. Phase I of the project is scheduled to be commissioned over a period of 39 months, and Phase II is scheduled to be executed in a period of 42 months.

BGR will import the boiler, turbine and generator equipment from Dongfang Electric Corporation Limited (HKG:1072) (Sichuan, China) at an estimated cost of $405 million. Equipment specifications include a station heat rate of 2,200 kilocalories per unit and auxiliary power consumption of 9% at 54 MW. BGR will provide material and services with an estimated value of $500 million. The Kalisindh project will include installation of two natural draft-cooling towers, both of which will be 200 meters in height. These towers will be the tallest in Asia. The power station is also being designed as a zero-discharge project that will adhere to stringent environmental standards.

The deal is reported to be the largest EPC contract ever secured by a company in India. BGR outbid power equipment major Bharat Heavy Electricals Limited (BOM:500103) (BHEL) (Mumbai) for the second time to secure an EPC contract for a power project. BHEL reportedly quoted $38 million higher than BGR for the Kalisindh project. The first win for BGR over BHEL came earlier this month when it outbid BHEL to clinch a $775 million EPC contract from the Tamil Nadu Electricity Board for a 600-MW expansion of the existing 840-MW thermal power plant in Mettur.

BGR Energy Systems consists of seven business divisions that include air fin coolers, captive power projects, electrical projects, environmental engineering, infrastructure, oil and gas equipment, and power projects. BGR is primarily an EPC player focused on the supply of BoP for power projects. It ended the previous fiscal year with sales of $380 million and an order book of $803 million, of which power EPC and BoP orders constituted 85%. BGR undertakes in-house production of 40% to 50% of the equipment required to execute a BoP. The order book of the company currently stands at over $2.75 billion and includes four BoP contracts for power projects of 500 MW each, the EPC contracts for the Kalisindh and Mettur power projects of 600 MW each, and equipment contracts in the oil and gas sector.

BGR is currently pursuing partnerships and joint ventures with global players to break into the boiler-turbine-generator manufacturing segment, which is currently monopolized by BHEL. If successful in its endeavors of forward integration, BGR could emerge as one of the few providers of integrated solutions for power projects.

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