BHEL and MPPGCL Form Joint Venture for Supercritical Thermal Power Plant in Madhya Pradesh

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Researched by Industrial Info Resources (Sugar Land, Texas)--In line with the policy to set up supercritical power projects in collaboration with state utilities on a build, own, and operate (BOO) basis, state-owned energy and infrastructure equipment manufacturing company Bharat Heavy Electricals Limited (BSE:500103) (BHEL) (New Delhi), has entered into an understanding with the Madhya Pradesh Power Generation Company (MPPGCL) (Jabalpur, Madhya Pradesh) to form a joint venture company for setting up a thermal power plant in the state.

The 1,600-megawatt (MW) supercritical thermal power project will be established in Khandwa in Madhya Pradesh by the during the next four to five years, with the first unit expected to be completed 48 months from the order date, and the next unit about six months later. Both establishments will initially have an equal equity stake in the company. However, the holdings will probably eventually be diluted to 26% to facilitate participation from other subscribers, including financial institutions, banks and private players.

With a project pipeline comprising 11 units totaling 8,800 MW, BHEL is contemplating forming its power business into a separate company. Based on the BOO engagement model, BHEL has ongoing joint ventures with state-run power firms in Maharashtra, Tamil Nadu and Karnataka to set up seven power units.

In separate deals with the Tamil Nadu Electricity Board (Chennai, Tamil Nadu), Karnataka Power Corporation Limited (Bangalore, Karnataka) and Maharashtra State Power Generation Company Limited (Mumbai), BHEL has agreed to set up supercritical thermal power projects with a 26% equity participation in the venture. Projects will be funded by an 80:20 debt-equity ratio, with state firms contributing 26% to equity holdings and remaining 48% sourced from financial firms.

The projects include the 1,600-MW Udangudi plant at Tuticorin in Tamil Nadu, two projects in the Raichur district of Karnataka, a 1,320- to 1,600-MW plant in Yeramarus, a 660- to 800-MW unit in Edlapur, and a 1,200-MW plant at Latur in Maharashtra. Work on five of these units in Karnataka and Tamil Nadu are reported to have made good headway, with land acquisition already completed, and coal-linkage allocations in the works.

The required power units will be pre-engineered by BHEL at its facilities. The turbine-generator units for the ventures will be manufactured at the plant in Haridwar, and the once-through supercritical boilers at its factory at Trichy in Tamil Nadu. BHEL has since upgraded its power generator units of 660 MW and above to supercritical technology, enabling eco-friendly and efficient performance. By virtue of the clean development technology employed, these power projects are also eligible for carbon credits.

BHEL has also formed a joint venture comany called NTPC BHEL Power Projects Private Limited (New Delhi) with state-owned power company NTPC Limited (BSE:532555) (New Delhi) in order to explore engineering, procurement and construction ventures related to power equipment.

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