Indian Companies Forge Joint Ventures with International Companies to Manufacture Nuclear Power Equipment

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Researched by Industrial Info Resources (Sugar Land, Texas)--State-operated power generation equipment manufacturer Bharat Heavy Electricals Limited (BSE:500103) (BHEL) (New Delhi) is in talks with electrical equipment maker Areva T&D India Limited (BSE:522275) (Noida, Uttar Pradesh) to set up a 26:74 joint venture that will manufacture nuclear reactors. The joint venture would manufacture 1,600-megawatt (MW) European pressurized reactors in a facility that would be modeled along the lines of Areva's existing facility in Finland.

Areva T&D is the Indian division of Areva SA (EPA:CEI) (Paris). The company was recently awarded a contract worth almost $45 million by the Steel Authority of India Limited (BSE:500113) (New Delhi) to supply transmission and distribution (T&D) services to a steel plant in Bhilai, Chhattisgarh.

In September, BHEL identified Andhra Pradesh and Gujarat as the two states where it would set up greenfield units to manufacture nuclear power equipment. Visakhapatnam, Andhra Pradesh, has already been identified as a location while the selection process is still under way in Gujarat.

BHEL has committed about $300 million to set up nuclear forging and casting units through various joint ventures. In April, BHEL formed a 50:50 joint venture with Nuclear Power Corporation of India (NPCIL) (Mumbai, Maharashtra) to manufacture nuclear reactors. According to the proposal, BHEL will provide financial support while NPCIL will provide technical expertise. The joint venture will manufacture steam turbine generator sets of 700 MW and above. The joint venture intends to join hands with international companies to manufacture the nuclear reactors.

Global power systems manufacturer and service provider Alstom SA (EPA:ALO) (Levallois-Perret, France) recently signed a 51:49 joint venture with manufacturing and metal-forming company Bharat Forge Limited (BSE:500493) (Pune, Maharashtra) to manufacture state-of-the-art supercritical power equipment in India. The companies signed a second joint venture, which will manufacture related auxiliary equipment. Bharat Forge is the flagship company of the Kalyani Group. The first joint venture will design, manufacture and deliver core turbines and generator islands between the supercritical ranges of 600 MW to 800 MW. The total installed capacity of the facility will be 5,000 MW per year. The companies have agreed to explore the possibilities of manufacturing generators and turbines in the subcritical range, and for gas and nuclear applications, as well.

Soon after the Nuclear Suppliers Group (NSG) waiver, about 40 Indian public and private companies announced plans to take part in India's nuclear power aspirations. Private companies in India are not yet permitted to build nuclear power plants, but it is hoped that the situation will soon change. The major beneficiaries of the waiver are public sector companies such as NPCIL, National Thermal Power Corporation (BSE:532555) (New Delhi), Larsen & Toubro Limited (OTC:LTOUF) (Mumbai) and BHEL. Nuclear power generating companies, such as General Electric (NYSE:GE) (Fairfield, Connecticut), Rosatom Nuclear Energy State Corporation (Moscow, Russia), USEC Incorporated (NYSE:USU) (Bethesda, Maryland) and Westinghouse Electric Company LLC (Monroeville, Pennsylvania), are already in talks with companies such as Larsen & Toubro, BHEL, and Tata Power (BSE:500400) (Mumbai) about manufacturing and supplying nuclear power equipment. Russia's Atomstroyexport (Moscow) and Atomenergoproekt (Moscow) are assisting NPCIL with setting up the Kudankulam nuclear power project in Tamil Nadu.

More than technology, it is the lack of fuel that has slowed down India's indigenous nuclear power programs. Therefore, India's entry into the NSG is expected to help the nation become a major manufacturer of nuclear reactors and components. The deal is perhaps one of the most promising steps in India's plans to add 20,000 MW of power generation capacity by 2020. According to Venugopal Dhoot, former President of the Associated Chambers of Commerce and Industry of India, if all goes well, the waiver may help India generate 40,000 MW of power by 2015.

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