Foster Wheeler and BGR Energy Explore Power Equipment Manufacturing in India

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Researched by Industrial Info Resources (Sugar Land, Texas)--Global engineering, procurement and construction (EPC) major and leading power equipment supplier Foster Wheeler (NASDAQ: FWLT) (Clinton, New Jersey) is reportedly engaged in formal discussions with BGR Energy (BOM:532930) (Chennai, Tamil Nadu), to assess a potential collaboration between the two companies for the manufacture of power boilers in India. There are currently no indications whether the proposed collaboration would be in the form of a joint venture or a technology transfer agreement.

Foster Wheeler is currently the only company in the world with proven expertise in both supercritical and circulating fluidized bed combustion (CFBC) technologies. The company recently supplied a CFBC boiler for the world's first supercritical circulating fluidized bed project in Lagisza, Poland. The firm has supplied power equipment worldwide, including over 300 CFBC boilers, for projects with more than 110,000 MW of aggregate capacity. The Indian unit of Foster Wheeler at Chennai undertakes back-end design work.

CFBC is emerging as a popular technology in India where indigenous coal is of a low quality with low calorific value and high ash content. State-owned Neyveli Lignite Corporation (Neyveli, Tamil Nadu) is building two power projects of 250 MW each using CFBC boilers in Neyveli. Coastal Energen Private Limited (Chennai), a part of Dubai's Coal & Oil Group, is also planning to set up four units, each with CFBC boilers of 350 MW, for its thermal power project in Tuticorin, Tamil Nadu. Four CFBC units of 125 MW each are currently in operation at power stations in Akrimota and Surat in Gujarat. Another six units of 125 MW each are currently under execution in Surat, at the Giral thermal power station and Barsingsar thermal power station.

CFBC boilers are superior to conventional firing systems because of benefits such as fuel flexibility, compact boiler design, higher combustion efficiency, greater operating flexibility, reduced emission of pollutants, and a simplified fuel-feeding process. These boilers can be fed with any type of fuel including a combination of indigenous and imported coals, lignite, refinery residue, washery rejects, bagasse, rice husk and agricultural wastes.

BGR Energy Systems is an EPC player specializing in the supply of balance of plant (BoP) for power projects. During the last fiscal year, the company had 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 delivery. Earlier this month, BGR outbid state-owned Bharat Heavy Electricals Limited (BOM:500103) (BHEL) (New Delhi) to secure a $775 million EPC contract from the Tamil Nadu Electricity Board for a 600-MW power plant expansion project in Mettur. Last week, the firm secured a $1.2 billion EPC contract from Rajasthan Vidyut Utpadan Nigam Limited for the 1,200-MW Kalisindh thermal power project in the state.

The firm has been eyeing the Boiler-Turbine-Generator (BTG) sector, which is currently dominated by BHEL. BGR is pursuing partnerships and joint ventures with international companies. If the firm successfully forays into the BTG sector, the forward integration would enable it to emerge as one of the few providers of integrated solutions for power projects.

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