BHEL Secures $1.04 Billion Order for Jindal Power's 2,400-Megawatt Super-Thermal Power Project Expansion

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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, clinched a deal worth $1.04 billion to expand the power generation capacity of the Tamnar super-thermal power plant in Raigarh, Chhattisgarh, by 2,400 megawatts (MW). The contract was awarded by Jindal Power Limited (Noida, Uttar Pradesh), a subsidiary of Jindal Steel & Power Limited (BSE:532286) (JSPL) (New Delhi), which is looking to complete the expansion project over the next four years.

Under the contract, BHEL will install four 600-MW units at the plant. The scope of the contract encompasses design, engineering, manufacture, supply, erection, testing, installation and commissioning of boilers, generators and generator controls, steam turbines and auxiliary units for the power plant including electrostatic precipitators, station control and instrumentation units, and transformers.

The Tamnar power plant currently has a power generation capacity of 1,000 MW with four 250-MW coal-fired units. Fuel for the power plant is sourced through a conveyor tube from Jindal Power's captive coal mines that are located near the power plant.

JSPL, the parent company of Jindal Power, plans to invest more than $2.06 billion in the project during this period with a debt-to-equity ratio of 70:30. The firm will fund the equity amount of $620 million through internal accruals and plans to raise the debt amount of $1.44 billion within a period of one year through bank loans, issue of local bonds, and external commercial borrowings. Jindal Power has entered into a memorandum of understanding with Chhattisgarh's government to establish and operate a power project with a generation capacity of 2,520 MW with a proposed investment of $2.34 billion.

In another development, Bina Power Supply Company Limited (Bhopal, Madhya Pradesh), a subsidiary of Jaypee Group's Jaiprakash Power Ventures Limited (Dehradun, Uttarakhand), awarded a contract valued at $242 million to BHEL to develop a 500-MW thermal power plant comprising two 250-MW units in Bina, Madhya Pradesh. The deal marks the first phase of Bina Power's proposed 1,250-MW power project with five 250-MW units. The two units to be developed by BHEL are slated for synchronization during the Eleventh Five-Year Plan period (2007-12) and are expected to add 12 million kilowatt-hours of electricity per day to the regional grid upon commissioning. The scope of the contract encompasses design, engineering, manufacture, supply, erection, testing, installation and commissioning of boilers, turbines and auxiliary units.

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