L&T Favored by Indian Government to Manufacture 800-Megawatt Sets

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Researched by Industrial Info Resources (Sugar land, Texas)--Larsen & Toubro Limited (L&T) (Manapakkam, Chennai), India's largest engineering and construction conglomerate, is awaiting central government approval to enter the power-equipment-manufacturing sector for large super-critical thermal power plants. This will put the company on a similar standing to the state's Bharat Heavy Electrical in being allotted some 800-megawatt (MW) supercritical projects on a government-nomination basis. This will be the first time the nomination basis for projects has included private companies and not handed to Bhel as a matter of course.

The prime minister's committee on infrastructure will make the project nominations after a price benchmark for 800-MW equipment has been reached through a process of international competitive bidding with technology transfer as a required element in the bid package. L&T meets the technology requirement through an agreement with Japan's Mitsubishi, which will put it in a position to be manufacturing boilers and turbines by 2009. Up to that time, it will be able to import equipment from the Japanese company.

The committee's new nomination proposal would give Bhel and L&T up to 10 power projects to enable both companies to make the required investment in the development and absorption of the technology for the domestic manufacture of 800-MW generation sets. The scheme has been driven by the national target to add 78,500 MW to the national capacity by the end of the 11th five-year plan in 2012. Bhel will be 10% short of total domestic manufacturing capability up to the time it delivers the 10th 800-MW set in 2012, and L&T has been brought into the scheme to boost the capacity to meet the target.

In another move to execute the installation of new 800-MW sets along as fast as possible and to bypass the wait of up to a year for the price benchmarks to be set, the committee has given Bhel and other Indian companies temporary window of choice between negotiating the price of supercritical sets with state utilities, taking the equipment supply price for Krishnapatnam's ultra-mega power project as the benchmark or wait for price discovery under the ICB process.

The Economic Times reported that the committee's nomination and pricing proposals will be discussed further before being put to the cabinet for approval.

L&T covers civil, mechanical, electrical and instrumentation engineering construction and is spreading its global reach with more than 30 offices and several joint venture projects with leading international companies.

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