BHEL-GE Consortium Wins $550 Million EPC Contract for 740-Megawatt Power Project in India

---

Researched by Industrial Info Resources (Sugar Land, Texas)--A consortium of Bharat Heavy Electricals Limited (BHEL) (BOM:500103) (New Delhi, India) and General Electric (NYSE:GE) (Fairfield, Connecticut) has outbid Alstom (EPA:ALO) (Levallois-Perret, France) to win a $550 million engineering, procurement and construction contract from the hydrocarbons exploration giant Oil and Natural Gas Corporation (ONGC) (Dehradun, Uttaranchal) to set up a 740-megawatt (MW) power project at Palatana in the northeastern state of Tripura. The cogeneration waste-recovery power project, which is also ONGC's largest commercial power generation undertaking, is scheduled to be operational by 2012.

The plant will be developed in two phases. Phase I will provide a 360-MW unit that will be installed in a period of 42 months, followed by the installation of the second unit within the next three months. ONGC Tripura Power Company has been formed to oversee the project's commissioning. ONGC has a 50% equity stake in the new company while the state government of Tripura and Infrastructure Leasing & Financial Services Limited (Mumbai) hold the other half.

Power from the project was initially meant to be distributed among the northern states of Haryana, Punjab, Rajasthan and Uttar Pradesh and the northeastern states of Assam and Tripura, with 100 MW of power being allocated to each state. However, the Ministry of Power has directed that all of the electricity generated from the project will be utilized to feed only the power-starved regions of the northeast. The Power Grid Corporation of India (Gurgaon, Haryana), ONGC Tripura and the northeastern states will undertake the construction of a 650-kilometer, 400-kilovolt double-circuit transmission line connecting Palatana with the national grid in Bongaigon, Assam, at an investment of $450 million. The Ministry of Power has recommended the formation of a joint venture company by Infrastructure Leasing & Financial, the Power Grid Corporation, ONGC Tripura and the northeastern states to set up the transmission line.

BHEL's win in the ONGC Tripura bidding process follows close on the heels of a $450 million order placed on it by Damodar Valley Corporation (Calcutta, West Bengal) to set up a 500-MW power-generation unit in Jharkhand on a turnkey basis. The project is scheduled for commissioning by the end of the 11th Five-Year Plan (2008-12) and is expected to add 12 million units per day to the grid when operational.

Under the contract, BHEL will set up a 500-MW power unit at the Bokaro A thermal power station, which already has three operational units of 210 MW each, manufactured by BHEL. It will undertake design, engineering, manufacture, supply, construction and installation of boilers, generators, steam turbines, auxiliary units, electrostatic precipitators, controls and instrumentation, balance of plant, and civil works.

BHEL has won orders for 68 thermal power units in the range of 500 MW to 600 MW and has already commissioned 33 of them. In the last two years, Damodar Valley has placed orders for six 500-MW units with BHEL. The public-sector undertaking has firmly established itself as a leader in the manufacture of thermal units up to 600 MW in the subcritical range and has the capability to manufacture units up to 1,000 MW based on modern technology. BHEL now plans to introduce thermal sets of 800 MW in the supercritical range suited to domestic requirements, using local and imported coal as feed. It is also poised to undertake the manufacturing of hydro sets with higher power ratings and gas turbines based on advanced technology. The company is in the process of ramping up its manufacturing capacity from 10,000 MW per year to 15,000 MW per year within the next two years at an investment of $1.05 billion.

Industrial Info Resources (IIR) is a marketing information service specializing in industrial process, energy and financial related markets with products and services ranging from industry news, analytics, forecasting, plant and project databases, as well as multimedia services.