BHEL Bags $408 Million Contract from Oman to Supply Gas Turbines

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Researched by Industrial Info Resources (Sugar Land, Texas)--Bharat Heavy Electricals Limited (BSE:500103) (BHEL) (New Delhi), India's largest equipment manufacturer and engineering company in the power sector, has announced that it has won a $408 million contract from Oman to supply gas turbine generators.

The state-run engineering major will supply 126-megawatt gas turbine generators for various projects by Petroleum Development of Oman (PDO) (Muscat, Oman), a leading government-owned production and exploration company. According to the price agreement, or rate contract, between the companies, BHEL will supply and supervise the installation and commissioning of the gas turbine generator packages. The contract is good initially for a period of six years and has a provision to be extended for another three years if a mutual agreement is reached. During this extension period, PDO can buy additional units from BHEL.

BHEL's manufacturing facility in Hyderabad will fulfill the current order for producing gas turbines and associated equipment while the company's electronics division in Bangalore will supply control systems.

BHEL's recent win of this prestigious rate contract strengthens its position in the Middle East and Oman, in particular. PDO is an important customer of BHEL in Oman. PDO contributes to about 90% of Oman's crude oil output and nearly all of its natural gas supply. BHEL has executed four power projects on an engineering, procurement and construction (EPC) basis in the last four years for PDO. BHEL has supplied equipment for nearly 50% of PDO's installed power generating capacity. In addition to this, the company has also supplied three compressor units to PDO.

The premium "navratna" public sector enterprise has successfully executed 12 contracts in the past 12 years in Oman. Seven of these were power projects executed on a EPC basis that include PDO, Oman's Ministry of Housing, Electricity and Water (Muscat) and Oman Cement Company SAOG (MSM:OCO) (Muscat).

BHEL is one of the largest exporters of engineering products and services from India. The new long-term contract with PDO gives BHEL an opportunity to establish its presence in the international petroleum market as a supplier of power plant equipment and explore new regions for similar projects from oil exploration majors.

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