BGR Energy, Hitachi form joint ventures to make boilers, turbines

BGR Energy Systems has signed two joint venture agreements with Hitachi of Japan and Hitach Power Europe GmbH, Germany, a Hitachi subsidiary, to set up a boiler and a turbine manufacturing facility in Tamil Nadu with an estimated investment of Rs. 4,400 crore.

The first joint venture is for design, manufacture, installation and commissioning of supercritical steam turbines and generators for thermal power plants. The second one would be for supercritical steam generators for thermal power plants.

With the establishment of these two ventures BGR Energy will be the third company in India (after BHEL and L&T) to offer complete boiler, turbine-generator (BGT) solutions to the Indian power industry.

Addressing a press conference here on Friday, B. G. Raghupathy, Chairman and Managing Director, BGR Energy Systems, said Hitachi and BGR had jointly formed a new company called BGR Turbines Company (P) Limited for this purpose. It would have its manufacturing facility in Tamil Nadu with an estimated investment of Rs. 3,000 crore of which the equity portion would be Rs. 900 crore. BGR Energy would hold 74 per cent and Hitachi 26 per cent stake in the joint venture. It would provide direct employment for 1,200 people and commence production in 2012. It would have capacity to manufacture five units per annum in the 660-1,000 MW range.

With Hitachi Power, the company has formed a venture, BGR Boilers (P) Ltd., to manufacture boilers with an investment of Rs. 1,400 crore. The equity portion in the investment would be Rs. 420 crore. BGR Energy would hold 70 per cent and Hitachi Power 30 per cent stake in the joint venture. This plant would generate employment for 2,100 people and would have capacity to produce five units per annum in the 660-1,000 MW range. Production would commence in 2012.

Mr. Raghupathy said the financial closure for the joint venture was expected to be achieved in six months. Asked about the source of funding, he said BGR Energy had generated enough cash from its business and would be funding the power projects mainly through internal accruals.

He said the Indian economy was growing at 8 per cent per annum and to sustain this growth, availability of electricity was vital. The present per capita consumption of electricity at 750 kWh per annum was likely to increase to 1,000 kWh per annum by 2012.

He said the installed capacity of about 161,000 MW was set to grow multifold. A leading consultant had projected a capacity of around 750,000 MW by 2027. Thermal power, which constitutes about 70 per cent of the total generation, would provide bulk of this additional capacity. Large supercritical power plants would constitute the total of thermal plant additions.