India's L&T Secures $400 Million Equipment Contract Gas-Fired Power Plant in Andhra Pradesh

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Researched by Industrial Info Resources (Sugar Land, Texas)--India's leading power-equipment manufacturer, Larsen & Toubro Limited (BSE:500510) (L&T) (Mumbai), has secured a $400 million engineering, procurement and construction contract to build equipment for a 768-megawatt (MW) gas-fired power plant for GMR Energy Limited (Bangalore, Karnataka). The project will be located in Vemagiri, 12 kilometers from Rajahmundry, in Andhra Pradesh. The scope of the contract will include the design, supply, installation, and commissioning of equipment for two 364-MW units.

L&T-Sargent & Lundy Limited (Vadodara, Gujarat), a subsidiary of L&T, will undertake a detailed project study. The company will design, provide technical expertise, and carry out integration of plant infrastructure. L&T will undertake the design and manufacture of critical equipment, including valves, the heat recovery steam generator (HRSG), switchgears, conductors, and cooling towers. Construction is expected to be completed by 2012.

In 2006, L&T successfully commissioned a 388.5-MW power plant in Vemagiri for GMR Energy. The project was built with state-of-the-art 'F' technology procured from General Electric Company (NYSE:GE) (Fairfield, Connecticut). The HRSG and other equipment were manufactured by L&T at the company's facility in Hazira, Gujarat.

L&T is emerging as a leading name in the power-equipment industry in India. Until recently, state-owned public sector undertaking Bharat Heavy Electricals Limited (BSE:500103) (BHEL) (New Delhi), dominated the power engineering and manufacturing sector in India with very little competition. In the last two months, L&T has secured orders worth $1.46 billion for power equipment, including the $400 million contract from GMR Energy.

In August, Jaypee Group (New Delhi) signed an $828.5 million power plant equipment contract with L&T. Jaypee Group is setting up the 1,320-MW Nigrie supercritical thermal power plant in Singrauli, Madhya Pradesh. L&T-Mitsubishi Heavy Industries Boilers Private Limited (Mumbai) secured the boiler-turbine-generator (BTG) contract, while L&T will execute the steam turbines contract. The Jaypee Group is executing the development of the Nigrie project in two phases, with the first phase expected to begin operations in 45 months.

L&T emerged as the lowest bidder in the tendering process for the BTG package contract for the proposed 1,980-MW power plant being developed by Maharashtra State Power Generation Company Limited (MAHAGENCO) (Mumbai). The plant will be set up in Koradi, near Nagpur. Final approval of the contract is expected shortly. The project will consist of three 660-MW units, which will be built at a total cost of $2.47 billion. BHEL and Doosan Heavy Industries & Construction Company (SEO:034020) (Gyeongsahngnam, South Korea) were other contenders in the bidding process. BHEL was the next lowest bidder. To date, BHEL has executed several BTG package contracts for MAHAGENCO power projects.

BHEL and L&T are also participating in the bidding process for tenders issued by NTPC Limited (BSE:532555) (New Delhi) and Damodar Valley Corporation (Kolkata, West Bengal). The tenders are for the bulk order of 11 units of 660-MW each, which will be utilized in power projects in Maharashtra, Jharkhand, Uttar Pradesh and Bihar. Ansaldo Caldaie SpA (Milan, Italy), a consortium of Alstom SA (EPA:ALO) (Levallois-Perret, France) and Bharat Forge Limited (BSE:500493) (Pune, Maharashtra), as well as a joint venture of Toshiba Corporation (TYO:6502) (Tokyo, Japan) and JSW Group (Mumbai) are also taking part in the bidding process.

L&T has secured a repeat order from Nuclear Power Corporation of India Limited (NPCIL) (Mumbai) to design, manufacture and deliver four steam generators for 700-MW Pressurized Heavy Water Reactors (PHWR) for units 7 and 8 of the Rajasthan atomic power plant. In March, NPCIL awarded L&T with a $71.9 million contract to supply four steam generators for the Kakrapar atomic power project. L&T is also executing a $75.95 million contract for Uttar Pradesh Rajya Vidyut Utpadan Nigam Limited (UPRVUNL) (Lucknow, Uttar Pradesh), which includes the development of a coal-handling plant at Anpara. UPRVUNL is building a 1,000-MW thermal power plant at the site.

L&T is focusing on developing the company's international presence in the power equipment sector. Recently, L&T secured contracts worth $217.45 million for projects in the Middle East. The deals include a $153.45 million contract from state-owned Qatar Petroleum (Doha, Qatar) to design, construct and install four substations. The project, which is expected to be completed in 32 months, is critical for the development of the Ras Laffan Industrial City. Qatar General Electricity and Water Corporation (Doha) has awarded a $26 million contract to L&T to build one substation. L&T will also construct a 132/11-kilovolt substation for Dubai Electricity and Water Authority (Dubai, United Arab Emirates) at a cost of $24 million.

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