India's BHEL Wins $544 Million Contract for Thermal Power Project

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Researched by Industrial Info Resources (Sugar Land, Texas)--Jindal India Thermal Power Limited (JITPL) (New Delhi), the power segment of the Jindal Group (Kolkata, West Bengal), recently awarded India's state-run power equipment manufacturer Bharat Heavy Electricals Limited (BSE:500103) (BHEL) (New Delhi) with a $544 million order for the main plant package of a greenfield thermal power project in development in Derans, in the Angul district of Orissa. The order involves two 600-megawatt (MW) units. BHEL's work will include designing, engineering, manufacturing, supplying, erecting and commissioning the boilers, steam turbines and generators; all the associated auxiliaries and electrical works; electrostatic precipitators; and state-of-the-art controls and instrumentation.

The 1,200-MW, coal-based, pithead thermal power plant will be based on subcritical technology and will procure feedstock from the Mandakini coal block in Orissa and from Mahanadi Coalfields Limited (Sambalpur, Orissa), with which JITPL has a coal linkage. The first phase of the project is scheduled to be completed by September 2010 and the second phase by March 2011. The power generated is expected to be purchased by Grid Corporation of Orissa (Bhubaneswar, Orissa) and power-trading company PTC India Limited (BSE:532524) (New Delhi).

This follows a $309 million order awarded to BHEL by Korba West Power Company Limited (KWPCL) (Bilaspur, Chhattisgarh) for the 600-MW Avantha Bhandar thermal power project under construction in the Raigarh district of Chhattisgarh. The contract, signed in May 2009, requires BHEL to design, manufacture, supply, erect and commission the unit for boilers, steam turbines and generators, as well as all the associated auxiliaries. The $444 million combined-cycle gas-turbine project is being built by KWPCL on a build, own and operate basis. Avantha Power & Infrastructure Limited (Gurgaon, Haryana) is the sponsor of the project. In June 2009, Axis Bank Limited (BSE:532215) (Mumbai) arranged a syndicated loan worth about $450 million to finance the project.

The orders reflect the confidence placed in BHEL's technical expertise in executing projects in the 600-MW capacity range. The orders also show the confidence placed by independent power producers in BHEL's capabilities.

BHEL has established itself as the leading supplier of state-of-the-art equipment suited to Indian conditions and indigenous coal. In fact, close to 95% of BHEL's order book for the power sector includes orders from customers in the private sector. The company is an established producer of thermal sets of capacities to 1,000 MW. The company's product range also includes new thermal sets of 270 MW, 525 MW, and 600 MW. In order to fulfill the requirements of the country's power-development program, BHEL is equipping itself for the future by developing trained manpower, advanced technology, and other facilities. BHEL already has ramped up manufacturing capacity to 10,000 MW per year and is in the process of increasing this to 15,000 MW per year. BHEL intends to raise production capacity to 20,000 MW by 2011-12.

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