Bharat Heavy Electricals Ltd (Bhel), India’s largest power generation equipment manufacturing company, has entered into talks with private sector companies, Anil Dhiruhai Ambani Group company Reliance Energy Ltd (REL) and DS Construction Pvt. Ltd, to jointly bid for the 4,000MW-each ultra mega power projects (UMPPs).
Bhel initiated this move after its earlier partner, NTPC Ltd, decided to sever its association and decided to go it on its own. “Both Reliance Energy Ltd and DS Constructions have approached us to bid together for UMPPs,” said a senior Bhel executive who did not wish to be identified.
Collaboration with a strategic power-generation equipment manufacturer is critical for keeping generation costs low as these projects are being awarded through competitive bidding.
While a Reliance Energy spokesman declined to comment on the development, a DS Construction spokesman said, “We did meet the Bhel officials and discussed the possibilities of partnering and bidding for the UMPPs. However, no formal agreement has been signed till date.”
A research analyst at institutional brokerage firm in Mumbai, who did not wish to be identified, said, “It is a positive sign for the UMPPs as a concept, with new companies such as DS Constructions planning to bid for these projects, but from a Bhel perspective it is a bit retrograde as it will lose” business from NTPC.
The government proposes to build nine such ultra mega power projects, each with a capacity to generate 4,000MW.
NTPC had refused to partner with Bhel after it lost out to Lanco Infratech Ltd in thebid for the Sasan project. NTPC blamed it on the higher engineering, procurement and construction costs quoted by Bhel.
The NTPC-Bhel bid was for Rs2.12 per unit of power generated, compared with Lanco-Globeleq Singapore’s Rs1.19.
Reliance Energy had earlier quoted a tariff of Rs1.29 per unit for Sasan.