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Bhel eyes power projects worth $1.5 bn in Africa

Bhel eyes power projects worth $1.5 bn in Africa
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First Published: Thu, Oct 13 2011. 09 26 PM IST

A file photo of a gas turbine rotor on assembly bed at BHEL Hyderabad
A file photo of a gas turbine rotor on assembly bed at BHEL Hyderabad
Updated: Thu, Oct 13 2011. 09 26 PM IST
Hyderabad: State-owned Bharat Heavy Electricals Ltd (Bhel) will develop power projects in Uganda and Nigeria as part of India’s plans to broaden economic engagement with African countries to secure access to oil and gas blocks in the continent.
Bhel has separately partnered with private sector companies—Hindustan Construction Co. Ltd (HCC) and Abir Infrastructure Pvt. Ltd —for developing the 700 MW Karuma hydropower project in Uganda at an investment of around $1.5 billion. The Karuma project is being developed by Uganda’s ministry of energy, with HCC and Abir Infrastructure’s consortium being separately short-listed for placing bids for the engineering, procurement and construction (EPC) contract. Bhel plans to supply the electromechanical package for the project, which is valued at around Rs 1,500 crore.
“We are not the concession partners but will be vendor to these private companies who have been pre-qualified,” said the Bhel executive.
A file photo of a gas turbine rotor on assembly bed at BHEL Hyderabad
Civil construction usually comprises 60% of the cost of a hydroelectric power plant and such a partnership would help Bhel share the project risk. Hydropower projects are more complex to build than thermal power plants and need specialized technology and design.
A Bhel executive confirmed Bhel’s plans in Nigeria and Uganda. “We have good relations with the Ugandan government,” said another Bhel executive.
“HCC continuously evaluates opportunities in the infrastructure development space, including international prospects,” an HCC spokesperson said in an email. “We decline to comment on individual projects, until such a time they are part of our portfolio.”
Phone calls to Abir Infrastructure’s Delhi office remained unanswered.
In another development, Bhel plans to develop Nigeria’s first coal power project for the state-owned Power Holding Company of Nigeria. Bhel is preparing a feasibility report for the 1,000 MW project, which will require an investment of around $1.2 billion.
“The feasibility report will be submitted to the Nigerian parliament. The project will have four units of 250 MW each. Though Nigeria has a lot of gas in the Niger delta region. They have been unable to use gas for power generation due to repeated terrorist attacks, which have damaged the pipeline infrastructure,” said a senior Bhel executive, who did not want to be identified. “India is a net importer of crude oil from Nigeria. Payment in crude is also one of the options.”
Nigeria has 36.2 billion barrels of proven oil resources and is a member of the Organization of Petroleum Exporting Countries (Opec). It has the second largest hydrocarbon reserves in Africa after Libya. Of the 163.594 million metric tonnes (mmt) of crude oil imported by India in 2010-11, 15.81 mmt came from Nigeria. India is emulating China’s strategy of expanding its influence in Africa by building infrastructure in the continent, which is estimated to have 10% of global oil reserves but is facing a severe power shortage.
India depends on imports to meet its oil needs and is particularly vulnerable to price volatility in crude oil. As the world’s fifth-largest energy consumer, India imports 80% of its requirements and accounts for around 3.5% of the global consumption of crude.
It will become the third largest oil importer after the US and China before 2025 and the country’s energy demands are expected to almost double by 2030, according to the International Energy Agency.
Bhel posted a net profit of Rs 6,011 crore on revenue of Rs 43, 337 crore in the year ended 31 March. It received international orders worth Rs 3,700 crore during the fiscal. It hopes to win international orders worth Rs 5,000 crore this fiscal.
utpal.b@livemint.com
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First Published: Thu, Oct 13 2011. 09 26 PM IST
More Topics: Bhel | Uganda | Nigeria | HCC | Opec |