Home >Industry >Energy >L&T wins $250 million EPC contract for 400MW power plant in Bangladesh

Mumbai: Infrastructure major Larsen & Toubro (L&T) Ltd on Wednesday said it has won a $250 million engineering, procurement, construction (EPC) contract for setting up a 400MW gas-based power plant in Bangladesh.

L&T’s scope includes design, detail engineering, supply, installation and commissioning of the complete power plant on a turnkey basis, the company said in a release.

The contract might have come as a relief to the company which has faced a scarcity of new orders in the power segment during the current fiscal year. The segment, in fact, contributed just 1% to L&T’s new order inflows in the first six months of the current fiscal year, while accounting for 7% of the company’s revenue during the half year.

Even on a year-on-year basis, revenue from the power segment dropped 1% during April-September of the current year even as earnings before interest, taxes, depreciation and amortization (Ebitda) margin contracted by over 110 basis points to 3.3%.

With many gas-based power plants in India stranded due to the lack of gas supplies and consequent lack of new investments in such plants, L&T has, for some time now, focused on Bangladesh and the rest of South East Asia for growth. “The gas-based power plants are not expected to revive in India in the near future. However, South East Asia continues to offer good opportunities for gas-based plants. The business has taken various steps to enter these markets. The target countries for gas-based projects are Bangladesh, Sri Lanka, UAE and Indonesia," the company’s annual report for 2016-17 said. 

The Bangladesh power project will be executed by L&T-Sargent & Lundy Ltd, a joint venture between L&T and US based Sargent & Lundy Llc. 

“That L&T has bagged the fourth order in Bangladesh firmly establishes its project execution credentials in that country," Shailendra Roy, MD & CEO of L&T Power Ltd, said. 

Several orders in November, including the Rs8,650 crore order to build the Mumbai Trans Harbour Link notwithstanding, L&T has maintained that it won’t be able to meet its order inflow guidance of a growth of 12-14% in 2017-18.

“In so far as orders are concerned, we have looked at the pipeline once again as we regularly do. And we have also factored in that we are delayed by close to three months in terms of orders that we were expected to win. Considering that at the half year are at about -9%, our assessment is that we might pretty much land similar to the orders we reported in the previous year with the possibility of a marginal improvement," R. Shankar Raman, L&T’s whole time director and chief financial officer, had said at press conference after the company’s September quarter earnings announcement earlier this month.

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