NTPC, Bhel joint venture seeks tech, equity partners

NTPC BHEL Power Projects Pvt. Ltd (NBPPL), an equal joint venture between state-run companies NTPC Ltd and Bharat Heavy Electricals Ltd (Bhel), is scouting for a technology and an equity partner.

The company plans to set up a manufacturing facility for balance of plant (BOP) equipment by 2011-12 and power generation equipment with a yearly capacity of 5,000MW by 2014-15. BOP equipment comprises coal and ash handling plants and cooling towers among others, and excludes main power plant equipment such as boilers, turbines and generators. The joint venture partners are open to diluting their stakes to 26% each for the project, which will require an investment of around '6,000 crore and provide direct employment to around 6,000 people.

"We are looking for a technology as well as an equity partner for the project," said a senior official in the department of heavy industry on condition of anonymity. "There will be a licensing agreement to import technology."

NBPPL has been set up to bolster power generation equipment production in the country. It will also handle engineering, procurement and construction contracts.

India, which has a limited number of BOP equipment vendors, will again fall short of its power capacity addition target on account of equipment supply delays and other reasons in the current five-year plan (2007-12), exacerbating an energy deficit that's seen as a bottleneck for economic growth.

"We have appointed SBI Caps as a consultant to look for an equity partner," the official said. "But before that, they (NTPC and BHEL) need to give us a concept of the project."

C.P. Singh, chairman and managing director of NBPPL, confirmed that the company was "looking for technology partners for various systems and products". He did not comment on the company seeking an equity partnership.

India has a power generation capacity of 167,317MW. Even as the target of adding 78,577MW in the 11th Plan period has been revised to 62,374MW, total capacity added till date is 29,361MW.

Projects are faltering because of reasons as varied as shortage of power generation equipment, delayed investment decisions, contractual problems, resistance to land acquisition, delays in environmental and forest clearances, geological issues and natural calamities.

"Under phase one of NBPPL, we are looking at tying up technology transfers for balance of plant equipment such as coal handling and ash handling packages. In the second phase we will be seeking technology partners for turbine and generators. Post that we will be seeking equity partnerships, the plans for which are in early stages," said a senior NTPC executive who did not want to be identified.

The joint venture has already acquired 750 acres from the Andhra Pradesh government at the project site at Mannavaram. The foundation stone for the manufacturing facility was laid by Prime Minister Manmohan Singh in September. The joint venture will also work as an engineering, procurement and construction company for setting up power projects.

"Coal handling and ash handling are the two biggest packages for the BOP equipment. At an appropriate time, a strategic investor will be brought in. It could be anybody who can raise both debt and equity," said a senior Bhel executive who also requested anonymity.

Bhel has a near-monopoly in the domestic power generation equipment space, with 60% market share. Out of the total orders placed for power generation equipment in the 11th Plan, orders for 42,431.58MW have been placed with Bhel, the country's largest power equipment maker, which has an annual capacity of 15,000MW.