In a first for China’s largest power generation equipment manufacturer, Dongfang Electric Corp. plans to jointly bid for power projects in India. The company is eyeing the government’s ambitious 4,000MW ultra mega power projects.
“We have options of either remaining a power generation equipment supplier or jointly bidding with an Indian company to develop the 4,000MW projects,” said Wen Ya, the company’s chief representative in India. “We are evaluating both scenarios as both the scenarios are workable. We have been approached by all the big companies in the Indian power sector.” He declined to name the companies, citing commercial considerations.
If Dongfang does bid, it will be the first time the Chinese firm will participate in power generation projects as a developer. Due to the economies of scale, Dongfang belives it will be able to compete quite aggressively, which would translate into lower per-unit power generation tariffs. This also means competition for big power project developers in the country, such as NTPC Ltd.
In addition, Dongfang’s entry could also “result in the timely execution of the projects,” says Navneet Iyengar, research analyst at institutional brokerage firm Anand Rathi Securities.
Dongfang uses technology from Alstom SA for boilers and Toshiba Corp. for turbines, and has a current manufacturing capacity of 31,000MW per year. Of this, 26,000MW is in thermal capacity with the balance being in hydroelectric power generation. That compares with the current capacity of Bharat Heavy Electricals Ltd (Bhel) of 7,500MW per year, which the company plans to augment to 15,000MW by 2009.
“One of our adavantages is the efficiency that we offer not only in terms of cost competitiveness but also in the timely delivery of equipment,” claims Wen. “We are a big player in the power generation equipment business. As India’s economy is growing at a fast pace, it offers us a bright opportunity to grow.”
The government proposes to build nine ultra mega power projects, each with a capacity to generate 4,000MW, at Sasan (Madhya Pradesh), Mundra (Gujarat), Tadri (Karnataka), Girye (Maharashtra), Akaltara (Chhattisgarh), Cheyuur (Tamil Nadu), Jharsuguda (Orissa), Krishnapattnam (Andhra Pradesh) and Tilaiya (Jharkhand). But barring the Mundra project, all these projects have run into various individual issues. In a related development, Dongfang is also planning to set up a service facility in India to provide support to the projects that it has supplied its equipment to.
“As of now, we do not plan to hire Indian engineers,” says Wen. “Once the facility is in place, we will consider hiring (Indian engineers) who will be trained by our own engineers,” he said. He declined to give a time frame.
Dongfang manufactures equipment for large hydroelectric power stations, thermal power stations and nuclear power stations. It also bids for contracts for setting up power generation stations and has taken up power-project contracts in over 10 countries.
“The other countries on which we are concentrating include Indonesia, Vietnam, Turkey, Iran and Pakistan,” Wen said.
The company is already working on a few projects in India, including two projects of the West Bengal Power Development Corp with capacities of 600MW and 300MW at Sagardighi and Durgapur, respectively. The company also won Lanco Amarkantak’s 600MW project at Korba in Chhattisgarh.
Dongfang is also looking at an opportunity to set up a manufacturing base in India, creating what could be a major competitor to Bhel, as first reported by Mint on 23 February.
“We are also contemplating this issue and have done some preliminary research on the subject,” said Wen.