The newly set up NTPC-BHEL Power Projects Ltd (NBPPL), incorporated specifically to execute engineering, procurement and commissioning (EPC) contracts and equipment orders of mega power projects, would soon have a new private sector partner.
“The joint venture will not be a government company,” an official with the power ministry, who did not wish to be identified, said. “Work will start immediately to bring in a partner, who will ensure it is a private company promoted by two navratna PSUs.”
A “private company” status will give the joint venture “enormous managerial, commercial and technological flexibility not enjoyed today by either NTPC or BHEL even though they are navratna companies,” the official said.
Any entity where the government holds a minimum of 50 per cent and at least one equity share cannot be categorised as “private company” under Indian norms.
There are instances, such as Power Trading Corporation (PTC), where entities sponsored by government-owned corporations are private companies by their organisational and equity holding structure.
The official said government could offer up to 26 per cent stake in the joint venture firm to financial institutions like it has been done in the case of PTC, where domestic financial institutions have up to 30 per cent stake.
The power ministry has asked the both BHEL and NTPC to look for a suitable domestic or a global partner.
To start with, NBPPL will take up only EPC projects. Its first plant, which will manufacture power equipment in the 5,000 megawatt range, is expected to be in place by 2013 at an estimated investment of Rs 6,000 crore, the official said.
“By the end-August, NTPC and BHEL will examine one complete EPC contract from their existing portfolio that will be off-loaded to the joint venture solely for the purpose of starting the new company’s operations. Thereafter, contracts will be won only through competition,” the official said.
NBPPL has also been mandated to ‘focus’ on manufacture of equipment other than boilers and turbines since adequate capacity is being built by BHEL and private sector giants like Larsen and Toubro and Alstom.